Question

Stein berg company produces commercial printers. Calculate the number of regular models and deluxe models that must be sold to break even.

Answer 1

Stein berg company produces commercial printers. Calculate the number of regular models and deluxe models that must be sold to break even.

Let's say that the owner of commercial printers needs to earn a profit of $1,200 per week rather than merely breaking even. You can consider the owner's required profit of $1,200 per week as another fixed expense. In other words the fixed expenses will now be $3,600 per week (the $2,400 listed earlier plus the required $1,200 for the owner). The new point needed to earn $1,200 per week is shown by the following break-even formula:

The break-even point= Total Fixed expenses/Contribution Margin ratio

3600/15=240 Printers per week.

Break-even Point In Sales Dollars

One can determine the break-even point in sales dollars (instead of units) by dividing the company's total fixed expenses by the contribution margin ratio.

The contribution margin ratio is the contribution margin divided by sales (revenues)
The ratio can be calculated using company totals or per unit amounts. We will compute the contribution margin ratio for this company by using its per unit amounts:

Revenue –Variable cost

24-9=15 Contribution

Contribution Margin ratio=Contribution Margin/Sale

15/24=62.5%

The Breakeven points in sales

Breakeven points in sales=Total Fixed exp / C Margin ratio

2400/62.5%=3840 per week