Question

8 pt X Company is starting a new merchandising business and provides the following budgets for its provides the following budgets for its two products: Product Revenue Total CM $328,900 $107,900 B 281,204 79,464 Next year's budgeted fixed costs are $230,000. X Company would like to at least break even in its first year what must total sales be in order for that to happen round unit numbers to two decimal places y Assume product mix will not change. 10. AO $541,994 BO $634,133 CO 8741,935 DO $868,065 EO $1,015,635 FO $1,188,294 to at least break even in its first year of operation; s to two decimal places)? Assume that the budgeted

Answer 1

Total sales = $328,900 + $281,204 = $610,104

Total CM = $107,900 + $79,464 = $187,364

CM ratio = $187,364 / $610,104 = 31%

Sales to breakeven = Fixed cost / CM ratio

= $230,000 / 31%

= $741,935

Option C.