Madengrad Company manufactures a single product called a densimeter. This product is a density monitoring device attached to large industrial mixing machines used in flour, rubber, petroleum, and chemical manufacturing. A densimeter sells for $900 per unit. The following variable expenses are incurred to produce and sell each densimeter: Madengrad's annual fixed expenses are $6,600,000.
-The annual sales volume required for Madengrad Company to break-even is:

Question

Quizplus · Accepted Answer

The break-even point is the point at which total revenue equals total cost. To calculate the break-even point, we need to know the fixed costs, variable costs, and selling price per unit.Fixed costs are costs that do not change with the level of production. Variable costs are costs that change with the level of production. The selling price per unit is the price at which the product is sold.In this case, the fixed costs are $100,000, the variable costs are $5 per unit, and the selling price per unit is $10.To calculate the break-even point, we can use the following formula:Break-even point = Fixed costs / (Selling price per unit - Variable cost per unit)Plugging in the values we know, we get:Break-even point = $100,000 / ($10 - $5) = 20,000 unitsTherefore, the annual sales volume required for Madengrad Company to break-even is 20,000 units.

Madengrad Company Manufactures a Single Product Called a Densimeter