Question

Data concerning Follick Corporation's single product appear below: Selling price per unit $ 220.00 Variable expense per unit $ 74.80 Fixed expense per month $ 141,240 The break-even in monthly dollar sales is closest to: (Round your intermediate calculations to 2 decimal places.)

Answer 1

Answer:

The break even in dollars is $214000

Explanation:

The break even point in dollars is the amount of revenue earned that is equal to total cost and there is no profit or no loss. The break even is used to calculate the minimum revenue that should be earned by the firm to cover its total costs. The break even in dollars is calculated by dividing the fixed costs by the contribution margin ratio.

Break even in dollars = Fixed costs / Contribution margin ratio

Where, contribution margin ratio = (Selling price per unit - Variable cost per unit) / Selling price per unit

Contribution margin ratio = (220 - 74.8) / 220   =  0.66 or 66%

Break even in dollars = 141240 / 0.66  = $214000 per month

Answer 2

Answer:

$214,000

Explanation:

Break-even sales is the point of sales at which the business incur no profit no loss. At this level of sale the business covers all of the variable and fixed cost associated with the product. Break-even is expressed in sales volume and sales value terms.

As per Given Data

Selling Price = $220.00 per unit

Variable Expense = $74.80

Fixed cost = $141,240

Contribution margin = Price - Variable cost = $220 - $74.80 = $145.2

Contribution margin = Contribution per unit / Selling price per unit

Contribution margin = $145.20 / $220 = 66%

Break-even Sales = Fixed cost / Contribution margin ratio

Break-even Sales = $141,240 / 66% = $214,000