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 $13 per unit and whose variable expense is $11 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.) baskets 1. Break-even point in unit sales 2. Break-even point in dollar sales 3. Break-even point in unit sales baskets Break-even point in dollar sales

Explanation / Answer

Contribution margin=(Sales-Variable costs)

=(13-11)=$2/unit

Contribution margin ratio=Contribution margin/Sales

=(2/13)=0.153846153

1.Breakeven point=(Fixed costs/Contribution margin) (4400/2)=2200 units 2.Breakeven point=(Fixed costs/Contribution margin ratio) (4400/0.153846153)=$28600 3.Breakeven point (4400+600)/2=2500 units Breakeven point (4400+600)/0.153846153=$32500

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