Hello, I keep getting the wrong answer. Please help. I get 8,048,290. What am I

Question

Hello, I keep getting the wrong answer. Please help. I get 8,048,290. What am I doing wrong?


Piedmont Fasteners Corporation makes three different clothing fasteners in its manufacturing facility in North Carolina. Data concerning these products appear below:


Velcro Metal Nylon
Normal annual sales volume 100,000 200,000 400,000
Unit selling price $1.65 $1.50 $0.85
Variable cost per unit $1.25 $0.70 $0.25

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Total fixed expenses are $400,000 per year.
All three products are sold in highly competitive markets, so the company is unable to raise its prices without losing unacceptable numbers of customers.

The company has an extremely effective lean production system, so there are no beginning or ending work in process or finished goods inventories.


Requirement 1:
What is the company's over-all break-even point in total sales dollars? (Round your CM ratio to 4 decimal places e.g., .12343 as .1234 or 12.34% and final answer to the nearest dollar amount. Omit the "$" sign in your response.)


Break-even point in total sales dollars $

Explanation / Answer

If you sell a bundle of 1 velcro, 2 metal, and 4 nylon, your contribution margin per bundle would be: 1.65+2*1.50+4*0.85 – (1.25+2*0.70+4*0.25) = $4.40 And your contribution margin percent would be $4.40/(1.65+2*1.50+4*0.85) = 0.5466 or 54.66% Break even in sales dollars = $400,000/0.5466 = 731,797 Answer: $731,797

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