Question

Mauro Products distributes a single product, a woven basket whose selling price is $19 and whose variable expense is $13.68 per unit. The company's monthly fixed expense is $11,704. Required: 1. Solve for the company's break-even point in unit sales using the equation method. (Do not round your intermediate calculations.) Break-even point in unit sales baskets 2. Solve for the company's break-even point in dollar sales using the equation method and the CM ratio. (Do not round intermediate calculations. Round "CM ratio percent" to nearest whole percent.) CM ratio Break-even point in dollar sales 3. Solve for the company's break-even point in unit sales using the formula method. (Do not round your intermediate calculations.) Break-even point in unit sales baskets 4. Solve for the company's break-even point in dollar sales using the formula method and the CM ratio. (Do not round intermediate calculations. Round "CM ratio percent" to nearest whole percent.) CM ratio Break-even point in dollar sales

Answer 1

Answer:

1.)
Requires sales = Variable cost + Fixed cost
19x=13.68 + 11704
5.32x = 11704
x = 1704/5.32
x=2200

2.)

Contribution margin ratio = Contribution margin per unit/Selling price per unit

= (Selling price per unit - Variable cost per unit)/Selling price per unit

= ($19- $13.68)/$19

= 28%

Break-even sales in dollars =

= ($13.68*2200) + $11704

= $ 41800

3.)

Break even point in units = Fixed cost/Contribution margin per unit)

= $11704/ Selling price per unit - Variable cost per unit

= $11704/($19- $13.68)

= $ 2200 units

4.

cm ratio = (19-13.68)*19
=28%

Breakeven sales in dollars = $11704/28%
=41800