Better Bonds
Better Bonds provided the following data: $\begin{array}{lr}
\text { Sales } & \$ 540,000 \
\text { Variable costs } & \$ 378,000 \
\text { Fixed costs } & \$ 120,000 \
\text { Expected production and sales in units } & 40,000
\end{array}$
-Refer to Plastic Gym. The company expects tree house demand to increase from 4,000 to 8,000 units. Given that demand for tree houses has doubled, what is the sales revenue at break-even assuming the new sales mix?
A) $140,000
B) $253,700
C) $411,250
D) $665,000

Question

Quizplus · Accepted Answer

To find the break-even sales revenue, calculate the contribution margin per unit and then use it to find the break-even point in sales dollars. Contribution margin per unit = (Sales - Variable Costs) / Expected production and sales in units = ($540,000 - $378,000) / 40,000 = $4.05. Break-even point in units = Fixed Costs / Contribution Margin per unit = $120,000 / $4.05 = 29,630 units. Break-even sales revenue = Break-even point in units * Sales price per unit = 29,630 * ($540,000 / 40,000) = $665,000.

Better Bonds Better Bonds Provided the Following Data -Refer to Plastic Gym

Better Bonds
Better Bonds Provided the Following Data -Refer to Plastic Gym