Heathman Inc. produces and sells a single product. The selling price of the product is $230.00 per unit and its variable cost is $89.70 per unit. The fixed expense is $308,660 per month.
-The break-even in monthly dollar sales is closest to:

Question

Quizplus · Accepted Answer

Unit CM = Selling price per unit - Variable expenses per unit
= $230.00 per unit - $89.70 per unit = $140.30 per unit
CM ratio = Unit contribution margin ÷ Unit selling price = $140.30 per unit ÷ $230.00 per unit = 0.61
Dollar sales to break even = Fixed expenses ÷ CM ratio
= $308,660 ÷ 0.61 = $506,000