Homework Answers
1. Contribution margin (CM) ratio = Contribution margin per unit / Selling price per unit = $15 / $60 = 25%
Variable expense ratio = Variable expense per unit / Selling price per unit = $45 / $60 = 75%
2. Break-even point in units = Fixed expenses / Contribution margin per unit = $240,000 / $15 = 16,000 units
Break-even point in sales dollar = Fixed expenses / Contribution margin ratio = $240,000 / 25% = $960,000
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