Question

Data concerning Follick Corporation's single product appear below: Selling price per unit $ 240.00 Variable expense per unit $ 76.80 Fixed expense per month $ 146,880 The break-even in monthly dollar sales is closest to: (Round your intermediate calculations to 2 decimal places.)

Answer 1

Answer:

$216,000

Explanation:

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

= (Fixed cost ) ÷ (Contribution margin ratio)

where,  

Fixed cost is $146,880

And the contribution margin ratio would be

= (Contribution margin per unit) ÷ (Selling price per unit) × 100

where Contribution margin equal to

= Selling price per unit - variable cost per unit

= $240 - $76.80

= $163.20

So, the contribution margin ratio is

= ($163.20) ÷ ($240) × 100

= 68%

So, the break even point in dollars is

= $146,880 ÷ 68%

= $216,000

We simply applied the above formula