Question

Crane Company has two divisions—Standard and Premium. Each division has hundreds of different types of tennis racquets and tennis products. The following information is available: (Round answer to 0 decimal places, e.g. 5,275.) Standard Division Premium Division Total Sales $300000 $700000 $1000000 Variable costs $180000 280000 Contribution margin $120000 $420000 Total fixed costs $300000 What is the break-even point in dollars?

Answer 1

The break-even point sales in dollars are $555,555.60

Step-by-step explanation:

Contribution margin ratio= (Total contribution margin / Total sales ) ×100

Contribution margin ratio= (S′ s contribution margin + P's contribution margin) / Total sales * 100

Contribution margin ratio = $120000 + $420000) / $1000000 * 100

Contribution margin ratio = 54%

Therefore, the contribution margin ratio of sales mix is 54%.

Break Even Point sales = Fixed cost / Contribution margin ratio

=$300,000 / 54%

=$555,555.60

Therefore, the break-even point sales in dollars are $555,555.60