Asked by Aparna Narayanan on Jul 15, 2024
Verified
Newham Corporation produces and sells two products.In the most recent month, Product R10L had sales of $28,000 and variable expenses of $6,440.Product X96N had sales of $22,000 and variable expenses of $7,560.The fixed expenses of the entire company were $32,710.The break-even point for the entire company is closest to:
A) $32,710
B) $45,431
C) $46,710
D) $17,290
Break-even Point
The level of production or sales at which total revenues equal total expenses, resulting in no net profit or loss.
Fixed Expenses
Costs that do not fluctuate with the level of production or sales, such as rent, salaries, and insurance premiums.
Variable Expenses
Costs that change in proportion to the activity or volume of production in a business.
- Learn about the role fixed and variable expenses play in determining a firm's profitability and the threshold for achieving cost and revenue balance.
Verified Answer
GF
Ginny FischerJul 20, 2024
Final Answer :
B
Explanation : 
CM ratio = Contribution margin ÷ Sales = $36,000 ÷ $50,000 = 0.72
Dollar sales to break even = Fixed expenses ÷ CM ratio = $32,710 ÷ 0.72 = $45,431
Reference: CHO6-Ref1
Keomuangtai Corporation produces and sells a single product.The company has provided its contribution format income statement for October.
CM ratio = Contribution margin ÷ Sales = $36,000 ÷ $50,000 = 0.72Dollar sales to break even = Fixed expenses ÷ CM ratio = $32,710 ÷ 0.72 = $45,431
Reference: CHO6-Ref1
Keomuangtai Corporation produces and sells a single product.The company has provided its contribution format income statement for October.
Learning Objectives
- Learn about the role fixed and variable expenses play in determining a firm's profitability and the threshold for achieving cost and revenue balance.