Hilty Corporation produces and sells two products. In the most recent month, Product U77D had sales of $45,000 and variable expenses of $15,750. Product D86D had sales of $49,000 and variable expenses of $22,790. And the fixed expenses of the entire company were $46,170. The break-even point for the entire company is closest to:

Question

Quizplus · Accepted Answer

The break-even point is calculated by dividing the total fixed expenses by the contribution margin ratio. The contribution margin for Product U77D is $29,250 ($45,000 - $15,750) and for Product D86D is $26,210 ($49,000 - $22,790). The total contribution margin is $55,460. The contribution margin ratio is $55,460 / $94,000 (total sales) = 0.590. The break-even point is $46,170 / 0.590 = $78,254.

Hilty Corporation Produces and Sells Two Products