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insens350 [35]
3 years ago
7

Mauro Products distributes a single product, a woven basket whose selling price is $28 per unit and whose variable expense is $2

3 per unit. The company’s monthly fixed expense is $9,500. Required: 1. Calculate the company’s break-even point in unit sales. 2. Calculate the company’s break-even point in dollar sales. (Do not round intermediate calculations.) 3. If the company's fixed expenses increase by $600, what would become the new break-even point in unit sales? In dollar sales? (Do not round intermediate calculations.)
Business
1 answer:
Ket [755]3 years ago
3 0

Answer:

Results are below.

Explanation:

<u>To calculate the break-even point in units, we need to use the following formula:</u>

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 9,500 / (28 - 23)

Break-even point in units= 1,900 units

<u>To calculate the break-even point in dollars, we need to use the following formula:</u>

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

Break-even point (dollars)=  9,500 / (5 / 28)

Break-even point (dollars)= $53,200

<u>Finally, the fixed costs increase to $10,100:</u>

Break-even point in units= 10,100 / 5

Break-even point in units= 2,020 units

Break-even point (dollars)= 10,100 / (5/28)

Break-even point (dollars)= $56,560

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