Question

Mauro Products distributes a single product, a woven basket whose selling price is $20 per unit and whose variable expense is $15 per unit. The company's monthly fixed expense is $10,000 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.) baskets 1 Break-even point in unit sales 12Break-even point in dollar sales 3 Break-even point in unit sales baskets break-even point in dollar sales

Answer 1

1)Computation of break even point in unit sales:

= Total fixed costs/Contribution per unit

Contribution per unit =Selling price - Variable cost per unit

=$20-$15

=$5

Break even point in unit sales=$10000/$5 =2000 units

2)Break even point in $=2000*$20 =$40000

Note : The above break point in units and $ monthly if we want yearly multiply with 12

3) if fixed costs increases by $600

Break even point in units=$10600/$5=2120 units

Break even point in $=2120*$20=$42400

2000 Break even point in cenits sales $40000 2 3 Break event point in & sales Break even point in obit sales Break event point in & sales (2120B $42400