Question

Sheridan Company has two divisions—Standard and Premium. Each division has hundreds of different types of tennis racquets and tennis products. The following information is available: (Round answer to 0 decimal places, e.g. 5,275.) Standard Division Premium Division Total Sales $300000 $700000 $1000000 Variable costs $210000 420000 Contribution margin $90000 $280000 Total fixed costs $300000 What is the break-even point in dollars? a. $500000.
b. $810811.
c. $1304348.
d. $111000.

Answer 1

Answer:

Break-even point in dollars is b) 810,811

Explanation:

Break-even point is the amount of sales in a company when there is no lost nor earnings. When the sales cover both fixed costs and variable costs.

It is calculated with the fixed cost divided to the porcentage of contribution margin.

step 1: % of contribution margin

CMg/total sales

($90,000+$280,000)/$1,000,000=0.37 %CMg

Step 2: Break-even point

FC/%CMg

$300,000/0.37=$810,811