Answer:
Instructions are listed below.
Explanation:
Giving the following information:
Incline Company generated $4,900,000 in revenue selling 4,025 units of its only product. Each unit has a contribution margin of $280. The company has fixed costs of $125/unit at the current production volume.
<u>First, we need to calculate the selling price per unit:</u>
Selling price= 4,900,000/4,025= $1,217.39
Now, we can calculate the contribution margin ratio:
Contribution margin ratio= contribution margin/ selling price
CMr= 280/1,217.39= 0.23
Finally, we can calculate the break-even point in dollars:
Break-even point (dollars)= fixed costs/ contribution margin ratio
Break-even point (dollars)= (125*4,025)/0.23= $2,187,500
