Answer:
The break even in dollars is $214000
Explanation:
The break even point in dollars is the amount of revenue earned that is equal to total cost and there is no profit or no loss. The break even is used to calculate the minimum revenue that should be earned by the firm to cover its total costs. The break even in dollars is calculated by dividing the fixed costs by the contribution margin ratio.
Break even in dollars = Fixed costs / Contribution margin ratio
Where, contribution margin ratio = (Selling price per unit - Variable cost per unit) / Selling price per unit
Contribution margin ratio = (220 - 74.8) / 220 = 0.66 or 66%
Break even in dollars = 141240 / 0.66 = $214000 per month
Answer:
$214,000
Explanation:
Break-even sales is the point of sales at which the business incur no profit no loss. At this level of sale the business covers all of the variable and fixed cost associated with the product. Break-even is expressed in sales volume and sales value terms.
As per Given Data
Selling Price = $220.00 per unit
Variable Expense = $74.80
Fixed cost = $141,240
Contribution margin = Price - Variable cost = $220 - $74.80 = $145.2
Contribution margin = Contribution per unit / Selling price per unit
Contribution margin = $145.20 / $220 = 66%
Break-even Sales = Fixed cost / Contribution margin ratio
Break-even Sales = $141,240 / 66% = $214,000
