Exercise 6-6 Break-Even Analysis [LO6-5] Mauro Products distributes a single pro

Question

Exercise 6-6 Break-Even Analysis [LO6-5] Mauro Products distributes a single product, a woven basket whose selling price is $13 per unit and whose variable expense is $9 per unit. The company's monthly fixed expense is $4,800. 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.) baskets 1. Break-even point in unit sales 2. Break-even point in dollar sales 3. Break-even point in unit sales baskets Break-even point in dollar sales

Explanation / Answer

1 Break even units= Fixed cost/ Contribution per unit              = 4800/ (sales- variable cost)            = 4800/(13-9)          =4800/4          1200 units 2 Break even sales= Break even units * selling price             = 1200*13            =15600 3 Break even units= Fixed cost/ Contribution per unit              = 4800+600/ (sales- variable cost)            = 5400/(13-9)          =5400/4 1350

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