Sunnripe Corporation manufactures and sells two types of beach towels, standard and deluxe. Sunnripe expects the following operating results next year: Sunnripe expects to have a total of $57,600 in fixed expenses next year. What is Sunnripe's overall break-even point next year in sales dollars?

Question

Sunnripe Corporation manufactures and sells two types of beach towels, standard and deluxe. Sunnripe expects the following operating results next year:  Sunnripe expects to have a total of $57,600 in fixed expenses next year. What is Sunnripe's overall break-even point next year in sales dollars?

Quizplus · Accepted Answer

11eacbfc_c777_dd7b_8ffe_ad28b852a94b_TB7552_00 CM ratio = Contribution margin ÷ Sales
= $120,000 ÷ $500,000 = 0.24
Dollar sales to break even = Fixed expenses ÷ CM ratio
= $57,600 ÷ 0.24 = $240,000

Sunnripe Corporation Manufactures and Sells Two Types of Beach Towels