Question

Wyly Inc. produces and sells a single product. The selling price of the product is $215.00 per unit and its variable cost is $66.65 per unit. The fixed expense is $405,099 per month. The break-even in monthly dollar sales is closest to:______.
a. $1,306,771.
b. $901,672.
c. $587,100.
d. $405,099.

Answer 1

Answer:

c. $587,100.

Explanation:

The computation of the break even sales in dollars is shown below:

Break Even Sales = Fixed Cost ÷ Contribution Margin Ratio

where,

Fixed cost is $405,099

And, the contribution margin ratio is

= (sales price - variable cost) ÷ sales price

= ($215 - $66.65) ÷ $215

= 69%

Now placing these above formulae to the given formula

= $405,099 ÷ 0.69

= $587,100

Hene, the correct option is c. $587,100