Question

Wimpy Inc. produces and sells a single product. The selling price of the product is $200.00 per unit and its variable cost is $60.00 per unit. The fixed expense is $407,820 per month. The break-even in monthly dollar sales is closest to:

Answer 1

break even sales $.582600

Step-by-step explanation:

break even is the point where the total cost is equal to total revenue

Total cost = variable cost + fix cost

contribution margin = selling price - vriable cost

after covering varaible we need to cover fix cost for break even point

hence the break even = fix cost/ contribution margin per unt

in order to identify the brek even point we have :

selling price = 200

variable cost = -60

contribution margin = 140 per unit

contribution margin = 140/200 = 0.7 per $

variable cost has been covered now we need to cover fix cost

break even in units = 407820/140 = 2913

break even in $ = 407820/0.7 = 582600