Question

Data concerning Follick Corporation's single product appear below:

Selling price per unit....................... $ 220.00

Variable expense per unit............... $74.80

Fixed expense per month............... $141,240


The break-even in monthly dollar sales is closest to:


a. 3,111

b. 6,892

c. 4,040

d. 13,525

Answer 1

$214,000

Step-by-step explanation:

The computation of the break even point in dollars is shown below:

= (Fixed cost ) ÷ (Profit volume ratio)

where,

Fixed cost = $141,240

And the profit volume ratio would be

= (Contribution margin) ÷ (Sales) × 100

= ($145.20) ÷ ($220) × 100

= 66%

where Contribution margin equal to

= Selling price per unit - variable expense per unit

= $220 - $74.80

= $145.20

So, the break even in dollars is

= $141,240 ÷ 66%

= $214,000

This is the answer and the options that are given in the question are wrong