Question

Ingrum Corporation produces and sells two products. In the most recent month, Product R38T had sales of $28,500 and variable expenses of $7,940. Product X08S had sales of $49,500 and variable expenses of $31,060. The fixed expenses of the entire company were $34,780.The break-even point for the entire company is closest to_______________.

Answer 1

Given:

The sales of R38T and X08S is $28500 and $49500 respectively

Variable expenses of R38T and X08S is $7940 and $31060 respectively

Fixed expenses of the company = #34,780

To find:

The break even point

Solution:

The image attached below shows the calculation of the break even point for the entire company.

The formulas used are,

$\text{Contribution margin = Sales - Variable Cost}$

$\text{CM ratio }= \frac{Contribution margin}{Sales}\times100$

$\text{Break Even Point }= \frac{\text{Total fixed expenses}}{\text{CM ratio}}$

The calculated break even point is $12,786.80.