Mauro Products distributes a single product, a woven basket whose selling price

Question

Mauro Products distributes a single product, a woven basket whose selling price is $26 per unit and whose variable expense is $21 per unit. The company's monthly fixed expense is $5,500. 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.) 1. Break-even point in unit sales 2. Break-even point in dollar sales 3. Break-even point in unit sales baskets baskets Break-even point in dollar sales

Explanation / Answer

1. Break-even point in unit sales = $5,500 / ($26 - $21) = 1,100 baskets

2. Break even in dollar sales = 1,100 baskets × $26 = $28,600

3. Break-even point in unit sales = ($5,500 + $600) / ($26 - $21) = 1,220 baskets

Break even in dollar sales = 1,220 baskets × $26 = $31,720

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