Question

Data concerning Follick Corporation's single product appear below: Selling price per unit $ 300.00 Variable expense per unit $ 78.00 Fixed expense per month $ 164,280 The break-even in monthly dollar sales is closest to: ___________

Answer 1

Answer:

$222,000

Explanation:

Given that,

Selling price per unit = $300.00

Variable expense per unit = $78.00

Fixed expense per month = $164,280

Contribution margin per unit:

= Selling price per unit - Variable expense per unit

= $300.00 - $78.00

= $222

Contribution ratio:

= Contribution margin per unit ÷ Selling price per unit

= $222 ÷ $300.00

= 0.74

Break-even in monthly dollar sales:

= Fixed expense per month ÷ Contribution ratio

= $164,280 ÷ 0.74

= $222,000