Ingrum Corporation produces and sells two products. In the most recent month, Product R38T had sales of $29,500 and variable expenses of $8,140. Product X08S had sales of $50,500 and variable expenses of $39,860. The fixed expenses of the entire company were $35,080.The break-even point for the entire company is closest to:

Question

Quizplus · Accepted Answer

Total sales = $29,500 + $50,500 = $80,000
Total variable expenses = $8,140 + $39,860 = $48,000
Contribution margin = Total sales - Total variable expenses = $32,000
Total fixed expenses = $35,080

Using the break-even formula:
Break-even point (units) = Total fixed expenses / Contribution margin per unit

Break-even point (units) = $35,080 / ($80,000 - $48,000)
Break-even point (units) = $35,080 / $32,000
Break-even point (units) = 1.09625

The break-even point for the entire company in dollars is:
Break-even point (dollars) = Break-even point (units) * Selling price per unit

Break-even point (dollars) = 1.09625 * ($80,000 / ($29,500 + $50,500))
Break-even point (dollars) = 1.09625 * ($80,000 / $80,000)
Break-even point (dollars) = $87,700

Therefore, the closest break-even point for the entire company is option B, which is $87,700.

Ingrum Corporation Produces and Sells Two Products