Question

Mcdale Inc. produces and sells two products. Data concerning those products for the most recent month appear below: Product I49VProduct Z50U Sales$45,000 $50,000 Variable expenses$13,300 $28,500 The fixed expenses of the entire company were $38,990. The break-even point for the entire company is closest to: Multiple Choice $80,790 $69,625 $38,990 $46,110

Answer 1

Answer:The break-even point for the entire company is closest to $69,625

Explanation:

Contribution margin =Sales-Variable costs

For   Product I49V

Contribution margin=$45,000 - 13,300=$31,700

Product  Z50U

Contribution margin=$50,000 - $28,500 =$21,500

Total Contribution margin of the two products =$31,700+$21,500=$53,200

Total sales of the two products =$45,000 + $50,000  =$95,000

Total Contribution margin ratio  =Total   Contribution margin / Total Sales

=$53,200 /$95,000 = 0.56

Therefore  total breakeven point=Fixed costs/Contribution margin ratio

=$38,990/0.56

=$69,625