Wyly Inc. produces and sells a single product. The selling price of the product is $170.00 per unit and its variable cost is $62.90 per unit. The fixed expense is $356,643 per month. The break-even in monthly dollar sales is closest to:
A)$963,900
B)$628,881
C)$566,100
D)$356,643

Question

Quizplus · Accepted Answer

To find the break-even point in sales dollars, we can use the following formula:

Break-even point (in units) = Fixed costs / Contribution margin per unit

Contribution margin per unit = Selling price per unit - Variable cost per unit

Contribution margin per unit = $170.00 - $62.90
Contribution margin per unit = $107.10

Break-even point (in units) = $356,643 / $107.10 per unit
Break-even point (in units) = 3,326.88 units

To find the break-even point in sales dollars, we can multiply the break-even point (in units) by the selling price per unit:

Break-even point (in sales dollars) = 3,326.88 units x $170.00 per unit
Break-even point (in sales dollars) = $566,100

Therefore, the closest answer is C) $566,100.

Wyly Inc Produces and Sells a Single Product