Dunkin Company manufactures and sells a single product that sells for $480 per unit; variable costs are $300. Annual fixed costs are $990,000. Current sales volume is $4,200,000. Compute the break-even point in dollars.

Question

Quizplus · Accepted Answer

To calculate the break-even point in dollars, we use the formula: Break-even point = Fixed Costs / (1 - (Variable Costs / Selling Price)). Given that the selling price is $480 and variable costs are $300, the contribution margin ratio is 1 - ($300 / $480) = 0.375. Therefore, the break-even point = $990,000 / 0.375 = $2,640,000.

Dunkin Company Manufactures and Sells a Single Product That Sells