Question

Question 3 of 4 < > 1.06/ 6.25 E licies Show Attempt History Current Attempt in Progress Sheridan Monograms sells stadium blankets that have been monogrammed with high school and university emblems. The blankets retail for $50 throughout the country to loyal alumni of over 3,800 schools. Sheridan's variable costs are 42% of sales: fixed costs are $116,000 per month. (21)

Answer 1

The breakeven point in sales dollars is calculated as follows:

Selling Price = $50 (Given)

Variable Cost = $50 * 42%

                      = $21

Breakeven point in sales dollars = Fixed Cost / Contribution Margin Ratio

Contribution Margin Ratio = Selling Price - Variable Cost / Selling Price *100

                                     = ($50 - $21) / $50 *100

                                     = 58%

Breakeven point in sales dollars = $116,000 / 58%

                                               = $200,000

The breakeven point in sales dollars is $200,000.