Mauro Products distributes a single product, a woven basket whose selling price is $12 per unit and whose variable expense is $10 per unit. The company’s monthly fixed expense is $5,400.
Required:
1. Calculate the company’s break-even point in unit sales.
2. Calculate the company’s break-even point in dollar sales. (Do not round intermediate calculations.)
3. If the company's fixed expenses increase by $600, what would become the new break-even point in unit sales? In dollar sales? (Do not round intermediate calculations.)
Answers
--All working forms part of the answer
A | Sale price per unit | $12 | |
B | Variable cost per unit | $10 | |
C = A - B | Unit Contribution margin | $2 | |
D | Fixed Cost | $5,400 | |
E = D/C | Break even point in unit sales | 2700 | Answer [1] |
F = E x A | Break even point in dollar sales | $32,400 | Answer [2] |
A = $ 5400 + 600 | New Fixed Cost | $6,000 | |
B | Unit Contribution margin | $2 | |
C = A/B | Break even point in unit sales | 3000 | Answer [3] |
D = C x $ 12 | Break even point in dollar sales | $36,000 | Answer [3] |
Mauro Products distributes a single product, a woven basket whose selling price is $12 per unit...
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