Question

Wimpy Inc. produces and sells a single product. The selling price of the product is $240.00 per unit and its variable cost is $88.80 per unit. The fixed expense is $374,598 per month. The break-even in monthly dollar sales is closest to:________.

Answer 1

The answer is $594,600

Step-by-step explanation:

Break-even in monthly dollars = Fixed Costs / Contribution Margin Ratio

Fixed cost is $374,598

Contribution Margin Ratio =

(selling price - variable cost) ÷ selling price

( $240.00 - $88.80) ÷ $240.00

0.63

Therefore, break-even in monthly dollar sales for Wimpy Inc. is closest to:

$374,598 ÷ 0.63

= $594,600