Question

With Password Saved Help Eastwick produces and sells three products. Last month's results are as follows: P1 P2 P3 Revenues Variable costs $170,000 47,000 $270,000 147,000 $270,000 111,300 Fixed costs total $270,000. What is Eastwick's break-even sales volume? (Assume the current product mix.) Multiple Choice 0 $710,000 0 $627,907 С $575 300 < Prev 10 of 31 Next >

Answer 1

Answer: $710,000

Calculations:

	P1	P2	P3	Total
Revenues	$170,000	$270,000	$270,000	$710,000
(Less): Variable costs	($47,000)	($147,000)	($111,300)	($305,300)
Contribution margin	$123,000	$123,000	$158,700	$404,700

Contribution margin ratio = (Total contribution ÷ Total revenues) x 100

= (404,700/710,000) x 100

= 57%

Break-even sales = Total fixed costs ÷ Contribution margin

= $404,700/57%

= $710,000

Hence, Eastwick's break-even sales is $710,000