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Grayson Enterprises manufactures springs and shock absorbers.Springs account for 40% of the company's total sales revenue,whereas shocks account for about 60%.The contribution margin ratios for springs and shocks are 45% and 35%,respectively.Grayson's fixed costs average $450,000 per month.
-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? (Round the answer to the nearest dollar. )

Question

[The following information applies to the questions displayed below.]
Grayson Enterprises manufactures springs and shock absorbers.Springs account for 40% of the company's total sales revenue,whereas shocks account for about 60%.The contribution margin ratios for springs and shocks are 45% and 35%,respectively.Grayson's fixed costs average $450,000 per month.
-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? (Round the answer to the nearest dollar. )

Quizplus · Accepted Answer

Using the formula to calculate the break-even point (BEP) in sales dollars: BEP = Fixed Costs / Contribution Margin Ratio. For Stupper Corporation, we need to calculate the weighted average contribution margin ratio for its two products. 
Weighted Average Contribution Margin Ratio = (Contribution Margin * Proportion of Sales) + (Contribution Margin * Proportion of Sales) 
= (0.40 * 0.45) + (0.60 * 0.35) 
= 0.18 + 0.21 
= 0.39 
BEP = $200,000 / 0.39 
BEP = $512,820 which rounds to $370,370 closest to choice C.

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