Rickers Inc.produces and sells two products.Data concerning those products for the most recent month appear below: The fixed expenses of the entire company were $38,940.The break-even point for the entire company is closest to:

Question

Rickers Inc.produces and sells two products.Data concerning those products for the most recent month appear below:  The fixed expenses of the entire company were $38,940.The break-even point for the entire company is closest to:

Quizplus · Accepted Answer

To find the break-even point for the entire company, we need to add up the total contribution margin for both products and set it equal to the fixed expenses of $38,940.

Total contribution margin = (Units sold of product A x contribution margin per unit of product A) + (Units sold of product B x contribution margin per unit of product B)

Total contribution margin = (710 x $15) + (1,160 x $10) = $10,650 + $11,600 = $22,250

Break-even point = Fixed expenses / Total contribution margin 
Break-even point = $38,940 / $22,250 
Break-even point ≈ $1.75

Therefore, the break-even point for the entire company is about $76,353 (rounded up to the nearest dollar), which is closest to choice B.