Neverlate is world famous for its precision pocket watches. The company has esti
ID: 2489924 • Letter: N
Question
Neverlate is world famous for its precision pocket watches. The company has estimated that variable manufacturing costs and variable selling costs per watch will be dollar 72 and dollar 43, respectively, for 20xx. Also during 20xx the company is expecting fixed manufacturing costs to total dollar 291,600 and fixed general and administrative expenses to amount to dollar 253,175. The anticipated selling price of each watch is dollar 500. Compute (a) the breakeven point in sales units and (b) the breakeven point in sales dollars. The breakeven point in sale, units is:________units The breakeven point in sales dollars is: dollar________Explanation / Answer
Solution.
Contribution margin ratio = $385 / $500 = 77%
The break even poiunt in sales dollar = $544,775 / 77%
= $707,500
The break even poiunt in sales unit = $707,500 / $500 = 1,415 unit.
Particulars Amount Sales 500.00 Variable Cost (115.00) Contribution Margin 385.00 Fixed Cost 544,775.00