Given the following data: The break-even point in dollars is:
A)$6,000
B)$4,500
C)$2,647
D)$4,000

Question

Given the following data:  The break-even point in dollars is:
A)$6,000 
B)$4,500 
C)$2,647 
D)$4,000

Quizplus · Accepted Answer

Fixed expenses = $3,000 + $1,500 = $4,500
Unit CM = Selling price per unit - Variable expenses per unit
= $2.00 per unit - ($0.30 per unit + $0.20 per unit)= $1.50 per unit
CM ratio = Unit CM ÷ Unit selling price
= $1.50 per unit ÷ $2.00 per unit = 0.75
Dollar sales to break even = Fixed expenses ÷ CM ratio
= $4,500 ÷ 0.75 = $6,000

Given the Following Data: the Break-Even Point in Dollars