In: Accounting
Blast Company sells three products. Contribution margin income statements for the three products follow:
Product A Product B Product C Total
Sales $100,000 $80,000 $40,000 $220,000
Variable expenses 55,000 64,000 12,000 131,000
Contribution margin 45,000 16,000 28,000 89,000
Fixed expenses $ 76,540
Income before taxes $ 12,460
The breakeven sales for the month for the company are closest to
Contribution margin Ratio = Combined Contribution/ Combined Sales *100 |
=$89,000/220,000*100 |
= 40.4545% |
break-even sales = Fixed cost/Contribution margin Ratio |
=$ 76,540/40.4545% |
= $189,200. |