Singapore Candy Cane Corporation is a single product firm with the following cost structure for next year: What is the company's break-even point next year in sales dollars?

Question

Singapore Candy Cane Corporation is a single product firm with the following cost structure for next year:  What is the company's break-even point next year in sales dollars?

Quizplus · Accepted Answer

Unit CM = Selling price per unit - Variable expenses per unit
= $1.20 per unit - $0.72 per unit = $0.48 per unit
CM ratio = Unit CM ÷ Unit selling price
= $0.48 per unit ÷ $1.20 per unit = 0.4
Dollar sales to break even = Fixed expenses ÷ CM ratio
= $64,800 ÷ 0.4 = $162,000

Singapore Candy Cane Corporation Is a Single Product Firm with the Following