Question

QUESTION 25 Flannigan Company manufactures and sells a single product that sells for $450 per unit; variable costs are $300. Annual fixed costs are $870,000. Current sales volume is $4,200,000. Compute the break-even point in dollars. $1,740,000. $2,612,612. $1,304,348. $4,202,899. $2,640,000.

Answer 1

Answer:

The correct answer is B.

Explanation:

Giving the following information:

Flannigan Company manufactures and sells a single product that sells for $450 per unit; variable costs are $300. Annual fixed costs are $870,000.

To calculate the break-even point in dollars, we need to use the following formula:

Break-even point (dollars)= fixed costs/ contribution margin ratio

Break-even point (dollars)= 870,000/ [(450 - 300)/450]

Break-even point (dollars)= 870,000/0.333= $2,612,612.6