Question

Wyly Inc. produces and sells a single product?

a.The selling price of the product is $170.00 per unit and its variable cost is $62.90 per unit.
b.The fixed expense is $356,643 per month.
c.The break-even in monthly dollar sales is closest to:

Answer 1

The break-even point in monthly dollar sales for Wyly Inc. is $566,281.90.

Step-by-step explanation:

A break-even point is the level of sales at which total revenues equal total costs, resulting in neither a profit nor a loss. To calculate the break-even point in monthly dollar sales, you need to divide the fixed expenses by the contribution margin ratio. The contribution margin ratio is calculated by subtracting the variable cost per unit from the selling price per unit and dividing the result by the selling price per unit.

Given the selling price per unit is $170.00 and the variable cost per unit is $62.90, the contribution margin per unit is $170.00 - $62.90 = $107.10. To find the contribution margin ratio, divide the contribution margin per unit by the selling price per unit: $107.10 / $170.00 = 0.63 (rounded to two decimal places).

To calculate the break-even point in monthly dollar sales, divide the fixed expenses by the contribution margin ratio:

$356,643 / 0.63 = $566,281.90 (rounded to the nearest dollar).

Answer 2

The break even point in monthly dollar sales is closest to: $566,100 (or 3,330 units at a price of $170)

Step-by-step explanation:

Hi, first let´s introduce the break-even point equation:

`BEP(units)=(Fixed Expenses)/(Price-VariableCost) =[Units]`

`BEP(Dollars)=BEP(Units)*Price`

Therefore, let´s find the BEP in units first

`BEP(units)=(356,643)/(170-62.90) =3,330`

So, the break even point in units is 3,330, let´s find the BEP($)

`BEP(Dollars)=3,330*170=566,100`

The break-even in monthly dollar sales is $566,100

Best of luck.