Mounts Corporation produces and sells two products.In the most recent month,Product I05L had sales of $32,000 and variable expenses of $10,880.Product P42T had sales of $45,000 and variable expenses of $18,380.And the fixed expenses of the entire company were $46,070.The break-even point for the entire company is closest to:

Question

Quizplus · Accepted Answer

To calculate the break-even point for the entire company, we need to combine the sales and variable expenses of both products.

Total sales = $32,000 + $45,000 = $77,000 
Total variable expenses = $10,880 + $18,380 = $29,260

Contribution margin = Total sales - Total variable expenses = $77,000 - $29,260 = $47,740

To calculate the break-even point, we can use the formula:

Break-even point = Fixed expenses / Contribution margin

Break-even point = $46,070 / $47,740 = 0.964

The break-even point is slightly less than 1, which means that the company needs to generate just under $1 in sales to cover every $1 in expenses.

To find the break-even point in dollars, we can multiply the break-even point in units (1) by the selling price per unit. The selling price per unit is not given, so we cannot calculate the break-even point in dollars.

Therefore, the closest answer choice is C) $74,306, which is the total of the variable and fixed expenses of the company (i.e. $29,260 + $46,070).

Mounts Corporation Produces and Sells Two Products