Mackson Products distributes a single product, a woven basket; its selling price

Question

Mackson Products distributes a single product, a woven basket; its selling price is $20 and its variable cost is $15 per unit. The company’s monthly fixed expense is $7,900.

1)Compute the company’s break-even point in unit sales using the equation method.

Compute the company’s break-even point in sales dollars using the equation method and the CM ratio. (Do not round intermediate calculations. Round your percentage answer to the nearest whole number.)

3)3. Compute the company’s break-even point in unit sales using the formula method.

4.

Compute the company’s break-even point in sales dollars using the formula method and the CM ratio. (Do not round intermediate calculations. Round your percentage answer to the nearest whole number.)

1)Compute the company’s break-even point in unit sales using the equation method.

Compute the company’s break-even point in sales dollars using the equation method and the CM ratio. (Do not round intermediate calculations. Round your percentage answer to the nearest whole number.)

3)3. Compute the company’s break-even point in unit sales using the formula method.

4.

Compute the company’s break-even point in sales dollars using the formula method and the CM ratio. (Do not round intermediate calculations. Round your percentage answer to the nearest whole number.)

Explanation / Answer

Cntribution= 20-15=5

Contribution margin ratio = cintribution/sales=5/20=.25

Break even point = fixed cost/contribution margin ratio=7900/.25=31600

Break even point in units=7900/5=1580units

Equation method

px = vx + FC + Profit

x=7900/20-15=1580 units

Break even in sales=1580*20=31600

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