Wimpy Inc.produces and sells a single product.The selling price of the product is $150.00 per unit and its variable cost is $58.50 per unit.The fixed expense is $366,915 per month. The break-even in monthly dollar sales is closest to:
A) $601,500
B) $366,915
C) $636,408
D) $940,808

Question

Quizplus · Accepted Answer

CM ratio = Unit contribution margin ÷ Unit selling price
= ($150.00 per unit - $58.50 per unit) ÷ $150.00 per unit
= $91.50 per unit ÷ $150.00 per unit = 0.61
Dollar sales to break even = Fixed expenses ÷ CM ratio
= $366,915 ÷ 0.61
= $601,500

Wimpy IncProduces and Sells a Single Product