Question

Newham Corporation produces and sells two products. In the most recent month, Product R10L had sales of $21,000 and variable expenses of $10,050. Product X96N had sales of $34,000 and variable expenses of $16,900. The fixed expenses of the entire company were $45,960. The break-even point for the entire company is closest to:

Answer 1

Answer: $109726

Step-by-step explanation:

First, we need to calculate the contribution margin. This will be:

= Sales - Variable cost

For Product R10L:

= $21,000 - $10,050.

= $10,950

Product X96N:

= $34,000 - $16,900

= $17,100

Total contribution margin = $10950 + $17100 = $28050

Total sales = $21000 + $34000

= $55000

Contribution Margin Ratio:

= CM / Sales

= 28050/55000

= 0.51

Overall break-even:

= Fixed costs / CMRatio

= $55960/0.51

= 109726