1. Blackner Corporation produces and sells a single product. Data concerning tha
ID: 2592554 • Letter: 1
Question
1. Blackner Corporation produces and sells a single product. Data concerning that product appear below:
The break-even in monthly dollar sales is closest to:
Multiple Choice
$918,060
$492,140
$723,800
$1,538,020
2. An increase in the expected salvage value at the end of a capital budgeting project will increase the internal rate of return for that project. True or False?
3. When a company is cash poor, a project with a short payback period but a low rate of return may be preferred to a project with a long payback period and a high rate of return. True or False?
Variable expense per unit. Fixed expense per month $220.00 $70.40 $492,184Explanation / Answer
Answer 1:
Contribution margin per unit = Selling price per unit - Variable expenses per unit
Contribution margin per unit = $220 - $70.40
Contribution margin per unit = $149.6
Contribution Margin Ratio = Contribution margin per unit / selling price per unit
Contributio margin ratio = $149.6 / $220
Contribution margin ratio = 0.68
Break even dollar sales = Fixed expenses / Contribution margin ratio
Break even dollar sales = $492,184 / 0.68
Break even dollar sales = $723,800
The correct answer is $723,800
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