Poole Products Inc. Poole Products Inc. has the following product information available:
Refer to the Poole Products Inc. information above. What is the break-even point in sales dollars?

Question

Poole Products Inc. Poole Products Inc. has the following product information available:
 Refer to the Poole Products Inc. information above. What is the break-even point in sales dollars?

Quizplus · Accepted Answer

The break-even point in sales dollars can be calculated using the formula: Breakeven point = Fixed Costs / Contribution Margin Ratio.

Fixed costs for Poole Products Inc. are $24,000.
Contribution margin ratio = (Sales price per unit - Variable cost per unit)/Sales price per unit.
From the given information, the contribution margin ratio is calculated as:
Contribution margin ratio = (36-18)/36 = 0.50.

Using these values, the break-even point in sales dollars can be calculated as
Breakeven point = Fixed Costs / Contribution Margin Ratio = $24,000 / 0.50 = $48,000.

Therefore, the correct answer is C) $60,000, which is the closest option to the calculated break-even point.