Flannigan Company manufactures and sells a single product that sells for $450 per unit; variable costs are $270. Annual fixed costs are $800,000. Current sales volume is $4,200,000. Compute the break-even point in dollars.

Question

Quizplus · Accepted Answer

The break-even point in dollars is calculated by dividing the total fixed costs by the contribution margin ratio. The contribution margin per unit is $450 - $270 = $180. The contribution margin ratio is $180 / $450 = 0.4. Therefore, the break-even point in dollars is $800,000 / 0.4 = $2,000,000.

Flannigan Company Manufactures and Sells a Single Product That Sells