Mauro Products distributes a single product, a woven basket whose selling price
ID: 2520286 • Letter: M
Question
Mauro Products distributes a single product, a woven basket whose selling price is $19 per unit and whose variable expense is $14 per unit. The company’s monthly fixed expense is $14,500.
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.)
Explanation / Answer
Contribution margin=Sales-Variable costs
=(19-14)=$5 per unit
1.Breakeven=Fixed cost/Contribution margin
=(14500/5)=2900 units
2.Breakeven value=(2900*19)=$55100
3.Breakeven=(600+14500)/5=3020 units
=(3020*19)=$57380.