Stupper Corporation manufactures two products; data are shown below: If Stupper's monthly fixed costs average $200,000,what is its break-even point expressed in sales dollars (rounded)?

Question

Stupper Corporation manufactures two products; data are shown below:  If Stupper's monthly fixed costs average $200,000,what is its break-even point expressed in sales dollars (rounded)?

Quizplus · Accepted Answer

To calculate the break-even point, we need to find the total contribution margin (sales revenue minus variable costs) and divide it by the total fixed costs.

For Product A: 
Contribution Margin per unit = $30 - $20 - $8 = $2 
Contribution Margin Ratio = $2 / $30 = 6.67% 
Breakeven Point in units = $200,000 / (6.67% * $30) = 1,111.11 units 
Breakeven Point in sales dollars = 1,111.11 units * $30 = $33,333.33

For Product B: 
Contribution Margin per unit = $90 - $60 - $18 = $12 
Contribution Margin Ratio = $12 / $90 = 13.33% 
Breakeven Point in units = $200,000 / (13.33% * $90) = 246.91 units 
Breakeven Point in sales dollars = 246.91 units * $90 = $22,222.22

Total Breakeven Point = $33,333.33 + $22,222.22 = $55,555.56

Therefore, the correct answer is C) $370,370.

Stupper Corporation Manufactures Two Products; Data Are Shown Below