Question

Mcdale Inc. produces and sells two products. Data concerning those products for the most recent month appear below: Product I49V Product Z50U Sales $ 49,000 $ 54,000 Variable expenses $ 13,700 $ 27,500 The fixed expenses of the entire company were $39,030. The break-even point for the entire company is closest to:

Answer 1

Answer: $27,917.30

Step-by-step explanation:

Given the following :

Products - - - - - 149V - - - - - - - Z50U

Sales - - - - - - - 49,000 - - - - - 54,000

Variable exp. - -13700 - - - - - - 27500

Company's overall fixed expense = $39,030

Break-even point for entire company ;

(Fixed expense / overall company's contribution margin ratio)

overall company's contribution margin ratio;

Total contribution margin / total sales

Contribution margin of product 149V:

(49,000 + 13700) = 62700

Contribution margin of product Z50U:

(54000 + 27500) = 81500

TOTAL CONTRIBUTION MARGIN :

(62700 + 81500) = $144,200

Total sales = (49000 + 54000) = $103,000

Contribution margin ratio:

Total contribution margin / total sales

144,000 / 103000 = 1.3980582

break even point in dollars :

(Fixed expense / overall company's contribution margin ratio)

$39,030 / 1.3980582

= $27917.291

= $27,917.30