Misa Corporation manufactures circuit boards and is in the process of preparing next year's budget.The pro forma income statement for the current year is presented below. The break-even point (rounded to the nearest dollar)for Misa Corporation for the current year is:
A)$2,625,000.
B)$1,865,672.
C)$1,724,138.
D)$2,155,172.

Question

Misa Corporation manufactures circuit boards and is in the process of preparing next year's budget.The pro forma income statement for the current year is presented below.  The break-even point (rounded to the nearest dollar)for Misa Corporation for the current year is:
A)$2,625,000. 
B)$1,865,672. 
C)$1,724,138. 
D)$2,155,172.

Quizplus · Accepted Answer

To calculate the break-even point, we need to find the total contribution margin and divide it by the contribution margin per unit.

Total revenues = $5,500,000
Variable costs = ($3,300,000 + $550,000 + $990,000) = $4,840,000
Contribution margin = $660,000

Contribution margin per unit = ($5,500,000 - $4,840,000) / 16,000 = $41.25

Break-even point = $660,000 / $41.25 = $15,942.86 or rounded to the nearest dollar: $1,724,138.

Therefore, the best answer is C.

Misa Corporation Manufactures Circuit Boards and Is in the Process