Garden Duty produces shovels and rakes. Sales and costs for the most recent year

$95,238 Contribution ratio = ( 200,000 - 116,000) / 200,000 = 42% BEP = 40,000/42% = $95,238

ID: 2425447 • Letter: G

Question

Garden Duty produces shovels and rakes. Sales and costs for the most recent year are indicated below:

Shovels Rakes Total

Units 8,000 20,000 28,000

Sales revenue $160,000 $40,000 $200,000

Variable costs 98,000 18,000 116,000

Fixed costs 28,000 12,000 40,000

Profit $ 34,000 $10,000 $ 44,000

The number of units and selling price per unit of both products appears to be stable for the foreseeable future.

How much total revenue will Garden Duty have at break-even? A. $156,000 B. $146,663 C. $13,333 D. $95,238

$95,238

Contribution ratio = ( 200,000 - 116,000) / 200,000 = 42%

BEP = 40,000/42% = $95,238

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