Question

Ploeger Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range.
Sales (4,000 units) $ 240,000
Variable expenses 156,000
Contribution margin 84,000
Fixed expenses 81,900
Net operating income $ 2,100
The break-even point in dollar sales is closest to:

a. $234,000
b. $237,900
c. $156,000
d. $0

Answer 1

Answer:

Break-even point (dollars)= $234,000

Explanation:

Giving the following information:

Sales (4,000 units) $ 240,000

Variable expenses 156,000

Fixed expenses 81,900

First, we need to calculate the selling price and unitary variable cost:

Selling price= 240,000/4,000= $60 per unit

Unitary variable cost= 156,000/4,000= $39 per unit

Now, we can calculate the break-even point in dollars, using the following formula:

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

Break-even point (dollars)= 81,900/ [(60 - 39)/60]

Break-even point (dollars)= $234,000