Question

Ingrum Corporation produces and sells two products. In the most recent month, Product R38T had sales of $33,000 and variable expenses of $8,840. Product X08S had sales of $54,000 and variable expenses of $32,050. The fixed expenses of the entire company were $36,130. The break-even point for the entire company is closest to:

Answer 1

Therefore, the break-even point for the entire company is approximately 0.784 or 78.4%.

Explanation:

To calculate the break-even point, we need to find the total contribution margin, which is the difference between the total sales revenue and total variable expenses.

For Product R38T, the contribution margin is $33,000 - $8,840 = $24,160.

For Product X08S, the contribution margin is $54,000 - $32,050 = $21,950.

The total contribution margin for both products is $24,160 + $21,950 = $46,110.

To calculate the break-even point, we divide the total fixed expenses by the total contribution margin:

Break-even point = Total fixed expenses / Total contribution margin

= $36,130 / $46,110

= 0.784

Therefore, the break-even point for the entire company is approximately 0.784 or 78.4%.