Question

Northern Pacific Fixtures Corporation sells a single product for $28 per unit. If variable expenses are 65% of sales and fixed expenses total $9,800, the break-even point is: (Round your intermediate calculations to 2 decimal places.) Garrison 16e Rechecks 2017-08-04 Multiple Choice $15,077 $18,200 $9,800 $28,000

Answer 1

Answer:

$28,000

Explanation:

The computation of the break-even point in dollars amount is shown below:

Break-even point in dollars amount = Fixed expenses ÷ Contribution margin ratio

where,

Fixed expenses is $9,800

And, the contribution margin ratio

= (Selling price per unit - variable cost per unit) ÷ (Selling price per unit) × 100

= ($28 - $28 × 0.65) ÷ ($28) × 100

= ($28 - $18.2)  ÷ ($28) × 100

= 35%

So, the Break-even point in dollars amount is

= $9,800 ÷ 35%

= $28,000