Final answer:
The break-even point for Newham Corporation is calculated by finding the level of sales where total revenue equals total expenses. The calculations indicate a break-even point close to $75,508, which is Option a in the choices provided.
Step-by-step explanation:
To calculate the break-even point for Newham Corporation, we need to find the level of sales at which total revenue equals total expenses (total fixed costs + total variable costs). First, let's calculate the contribution margin for each product by subtracting the variable expenses from the sales. Then, we sum the contribution margins and divide the total fixed expenses by this sum.
Product R10L's contribution margin = $31,000 - $10,780 = $20,220.
Product X96N's contribution margin = $44,000 - $18,470 = $25,530.
Total contribution margin = $20,220 + $25,530 = $45,750.
Now, we divide the total fixed expenses by the total contribution margin to find the break-even point:
Break-even point = Total fixed expenses / Total contribution margin = $46,060 / $45,750 ≈ $1.0068 per dollar of contribution margin.
To find the break-even sales in dollars, multiply the break-even point per dollar of contribution margin by the total sales ($31,000 + $44,000 = $75,000), which gives us:
Break-even sales = Break-even point per dollar of contribution margin * Total sales
Break-even sales ≈ $1.0068 * $75,000
Break-even sales ≈ $75,510
The closest answer to our calculation is $75,508 (Option a).