Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Imagine that a company which makes mugs sells them for $15 each. The fixed costs are $8,000. The variable cost for making one mug is

Imagine that a company which makes mugs sells them for $15 each. The fixed costs are $8,000. The variable cost for making one mug is $5. The contribution margin per unit is $10 because $15-$5=$10. The contribution margin ratio is 66.67%, since $10/$15 equals 2/3, which equals 66.67%. The company wants to determine its break-even point. Which equation in the formula method involves the contribution margin per unit and which equation in the formula method involves the contribution ratio? Also, what is the company's break-even point in units? How about the break-even point in dollars?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting History And The Rise Of Civilization, Volume II

Authors: Gary Giroux

1st Edition

163157793X, 9781631577932

More Books

Students also viewed these Accounting questions

Question

=+What do you wish you had known when you were starting out?

Answered: 1 week ago