Question

Henna Company produces and sells two products, Carvings and Mementos. It manufactures these products in separate factories and markets them through different channels. They have no shared costs. This year, the company sold 58,000 units of each product. Income statements for each product follow. Carvings Mementos Sales $ 974,400 $ 974,400 Variable costs 779,520 194,880 Contribution margin 194,880 779,520 Fixed costs 46,880 631,520 Income $ 148,000 $ 148,000 rev: 09_29_2021_QC_CDR-376 Required: 1. Compute the break-even point in dollar sales for each product. (Enter CM ratio as percentage rounded to 2 decimal places.)

Answer 1

The computation of the break-even point in dollar sales for each product is as follows:

Carvings = $234,400 ($46,880/0.2)

Mementos = $789,400 ($631,520/0.8)

What is the break-even point?

The break-even point represents the dollar sales or units at which the entity does not incur any loss or earn any profit.

At the break-even point, the total costs are equal to the total revenue.

Data and Calculations:

                                  Carvings     Mementos

Sales                         $ 974,400   $ 974,400

Variable costs             779,520       194,880

Contribution margin    194,880      779,520

CM Ratio                        20%             80%

Fixed costs                    46,880      631,520

Income                     $ 148,000   $ 148,000

Break-even point = Fixed costs/CM Ratio

Thus, the break-even points in sales dollars are Carvings, $234,400,, and Mementos, $789,400.

Learn more about the break-even point at brainly.com/question/15281855

#SPJ1