Question

Mauro Products distributes a single product, a woven basket whose selling price is $15 per unit and whose variable expense is $12 per unit. The company's monthly fixed expense is $4,200 Required: 1. Calculate the company's break-even point in unit sales 2. Calculate the company's break-even point in dollar sales 3. If the company's fixed expenses increase by $600, what would become the new break even point in unit sales? In dollar sales? 1. Break-even point in unit sales 1.400 baskets 2. Break-even point in dollar sales 21,000 3. 1.400 baskets Break even point in unit sales Break even point in dollar sales 21,000

Answer 1

Requirement 1 and 2

Requirement 1 and 2 Working
A	Sale Price per unit	$                 15.00
B	Variable Cost per Unit	$                 12.00
C=A x B	Unit Contribution	$                    3.00
D	Total Fixed cost	$           4,200.00
E=D/C	Breakeven point in units	1400.00
F= E x A	Breakeven in sales dollars	$         21,000.00

Requirement 3

New breakeven point
A	Sale Price per unit	$                 15.00
B	Variable Cost per Unit	$                 12.00
C=A x B	Unit Contribution	$                    3.00
D	Total Fixed cost (4200+600)	$           4,800.00
E=D/C	Breakeven point in units	1600.00
F= E x A	Breakeven in sales dollars	$         24,000.00