Question

Newham Corporation produces and sells two products. In the most recent month, Product R10L had sales of $35,000 and variable expenses of $11,180. Product X96N had sales of $48,000 and variable expenses of $17,870. The fixed expenses of the entire company were $46,100. The break-even point for the entire company is closest to:

Answer 1

Answer: $ 70923.08

Explanation:

Contribution margin=  Sales - Variable costs

For R10L,

Contribution margin = $ (35,000 -11,180 ) = $ 23,820

For X96N,

Contribution margin = $ (48,000 - 17,870) = $30,130

Total sales = $ (35000+48000) = $ 83000

Total Contribution margin  = $ (23820+30130) = $ 53950

Contribution margin ratio = (Contribution margin) ÷ (Sales)

=  (53950 )÷ (83000)

= 0.65

Overall break- even point = (fixed cost) ÷ ( Contribution margin ratio)

= $ (46100÷ 0.65)

≈ $ 70923.08

Hence, The break-even point for the entire company is closest to $ 70923.08.