Homework Answers
The break even point is computed as shown below:
= Fixed cost / PV ratio
PV ratio is computed as follows:
= Contribution / sales
= ($ 41.88 - $ 19.60) / $ 41.88
= 0.53199618
So, the break even point will be as follows:
= $ 22,870 / 0.53199618
= $ 42,989.03 Approximately
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