Maxson Products distributes a single product, a woven basket whose selling price
ID: 2374568 • Letter: M
Question
Maxson Products distributes a single product, a woven basket whose selling price is $29 and whose variable cost is $20.3 per unit. The company%u2019s monthly fixed expense is $21,750.
Compute for the company%u2019s break-even point in sales dollars using the equation method and the CM ratio. (Do not round intermediate calculations. Round your CM ratio to 2 decimal places. Omit the "$" sign in your response.)
Compute for the company%u2019s break-even point in sales dollars using formula method and the CM ratio. (Do not round intermediate calculations. Round your CM ratio to 2 decimal places. Omit the "$" sign in your response.)
Explanation / Answer
1. break even pont=fc/p-v =21750/29-20.3 =2500 2. break evne point sales =2500*29 =72500 CM ratio :- total sales=2500*29 =72500 total variable cost=2500*20.3 =50750 total contribution margin=72500-50750 =21750 CMration=21750/72500 =30% =