Asked by precious edwards on May 02, 2024
Verified
Wimpy Inc.produces and sells a single product.The selling price of the product is $150.00 per unit and its variable cost is $58.50 per unit.The fixed expense is $366,915 per month. The break-even in monthly dollar sales is closest to:
A) $601,500
B) $366,915
C) $636,408
D) $940,808
Variable Cost
Costs that vary directly with the level of production or sales volume, such as raw materials and direct labor costs.
Break-Even
The point where total costs equal total revenues, indicating no profit or loss.
Monthly Dollar Sales
The total value of all sales made within a month, expressed in dollars.
- Grasp the idea of break-even analysis in the context of sales value and unit quantity.
Verified Answer
ZK
Zybrea KnightMay 03, 2024
Final Answer :
A
Explanation :
CM ratio = Unit contribution margin ÷ Unit selling price
= ($150.00 per unit - $58.50 per unit)÷ $150.00 per unit
= $91.50 per unit ÷ $150.00 per unit = 0.61
Dollar sales to break even = Fixed expenses ÷ CM ratio
= $366,915 ÷ 0.61
= $601,500
= ($150.00 per unit - $58.50 per unit)÷ $150.00 per unit
= $91.50 per unit ÷ $150.00 per unit = 0.61
Dollar sales to break even = Fixed expenses ÷ CM ratio
= $366,915 ÷ 0.61
= $601,500
Learning Objectives
- Grasp the idea of break-even analysis in the context of sales value and unit quantity.
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