Question

que Saved Mauro Products distributes a single product, a woven basket whose selling price is $22 per unit and whose variable expense is $16 per unit. The company's monthly fixed expense is $10,200. 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 unt sales Break-even point in dollar sales < Prey 5 of 9 !! Nexo > te here to search

Answer 1

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1	Break - even point in unit sales	=	1,700	baskets
2	Break - even point in dollar sales	=	$     37,400
3	Break - even point in unit sales	=	1,800	baskets
	Break - even point in dollar sales	=	$     39,600
	Workings:
1	Sales Price per unit	=	$             22
	Cost of goods sold per unit	=	$             16
	Contribution per unit	=	$                6
	Fixed Expense	=	$     10,200
	Break - even point in unit sales	=	Fixed costs / Contribution per unit
		=	$10200 / $6
		=	1700	baskets
2	Break - even point in dollar sales	=	Break - even point in unit sales X Selling price per unit
		=	1700 baskets X $22
		=	$     37,400
3	When Fixed expenses increased by $600:
	Sales Price per unit	=	$             22
	Cost of goods sold per unit	=	$             16
	Contribution per unit	=	$                6
	Fixed Expense	=	$10200 + $600
		=	$     10,800
	Break - even point in unit sales	=	Fixed costs / Contribution per unit
		=	$10800 / $6
		=	1800	baskets
	Break - even point in dollar sales	=	Break - even point in unit sales X Selling price per unit
		=	1800 baskets X $22
		=	$     39,600