Question

question 5
maddaloni international, inc. produces and sells a single product. the product sells for $160.00 per unit, and its variable expense is $46.40 per unit. the company’s monthly fixed expense is $219,248.
required:
what’s the monthly break - even in total dollar sales?

Explanation:

Step 1: Calculate Contribution Margin per Unit

The contribution margin per unit is the selling price per unit minus the variable expense per unit.
Selling price per unit = $160.00, Variable expense per unit = $46.40.
Contribution Margin per Unit = $160.00 - $46.40 = $113.60

Step 2: Calculate Contribution Margin Ratio

The contribution margin ratio is the contribution margin per unit divided by the selling price per unit.
Contribution Margin Ratio = $\frac{113.60}{160.00}$ = 0.71 or 71%

Step 3: Calculate Break - Even in Dollar Sales

The formula for break - even in dollar sales is fixed expenses divided by the contribution margin ratio.
Fixed expense = $219,248, Contribution Margin Ratio = 0.71
Break - Even in Dollar Sales = $\frac{219248}{0.71}$ = $308,800

Answer:

The monthly break - even in total dollar sales is $308,800.