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 $22 per unit and whose variable expense is $18 per unit. The company's monthly fixed expense is $4,400. 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.Contribution margin=Sales-VC

=(22-18)=$4

Hence breakeven point=Fixed cost/Contribution margin

=(4400/4)=1100 baskets

2.Breakeven=(1100*22)=$24200

3.New breakeven=(4400+600)/4=1250 units

4.Breakeven value=(1250*22)=$27500.

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