In: Accounting
Chapter 6 Question 4:
Mauro Products distributes a single product, a woven basket whose selling price is $24 per unit and whose variable expense is $20 per unit. The company’s monthly fixed expense is $11,200.
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.)
Requirement 1
Breakeven point in units | 2,800 |
Requirement 2
Breakeven in sales dollars | $ 67,200.00 |
Requirement 3
Breakeven point in units | 2,950 |
Breakeven in sales dollars | $ 70,800.00 |
Working for requirement 1 and 2
A | Sale Price per unit | $ 24.00 |
B | Variable Cost per Unit | $ 20.00 |
C=A - B | Unit Contribution | $ 4.00 |
D | Total Fixed cost | $ 11,200.00 |
E=D/C | Breakeven point in units | 2,800 |
F= E x A | Breakeven in sales dollars | $ 67,200.00 |
Working for requirement 3
A | Sale Price per unit | $ 24.00 |
B | Variable Cost per Unit | $ 20.00 |
C=A - B | Unit Contribution | $ 4.00 |
D | Total Fixed cost | $ 11,800.00 |
E=D/C | Breakeven point in units | 2,950 |
F= E x A | Breakeven in sales dollars | $ 70,800.00 |