MC Qu. 38 The break-even point in dollar sales for Rice Company is $bep an... The break-even point in dollar sales for Rice Company is $342,000 and the company's contribution margin ratio is 34%. If Rice Company desires a profit of $101,320, sales would have to total: $559,600 $458,280 $640,000 $265,255

The break-even point in dollar sales for Rice Company is $bep an...

The break-even point in dollar sales for Rice Company is $342,000 and the company's contribution margin ratio is 34%. If Rice Company desires a profit of $101,320, sales would have to total:

	$559,600
	$458,280
	$640,000
	$265,255

 

Answer
$640,000

Deavila Inc. produces and sells two products. Data concerning those products for the most recent month appear below: Product Q91I Product J53Z Sales $ 15,800 $ 11,800 Variable expenses $ 5,800 $ 5,060 ________________________________________ Fixed expenses for the entire company were $13,930. Required: a. Determine the overall contribution margin ratio for the company. (Round your answer to 2 decimal places.) Contribution margin ratio b. Determine the overall break-even point in total sales dollars for the company. (Round your intermediate calculation to 2 decimal places and final answer to the nearest dollar amount. Omit the "$" sign in your response.) Break-even point $ c. If the sales mix shifts toward Product Q91I with no change in total sales, what will happen to the break-even point for the company? It will result in a decrease in the company's overall break-even point. Explanation: a. Product Q91I Product J53Z Total Sales $ 15,800 $ 11,800 $ 27,600 Variable expenses 5,800 5,060 10,860 ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ Contribution margin $ 10,000 $ 6,740 16,740 ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ Fixed expenses 13,930 ________________________________________ ________________________________________ Net operating income $ 2,810 ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________ Overall CM ratio = Total contribution margin/Total sales = $16,740/$27,600 = 0.61 b. Break-even point in total sales dollars = Fixed expenses/Overall CM ratio = $13,930/0.61 = $22,836 c. Product Q91I Product J53Z Sales (a) $ 15,800 $ 11,800 Contribution margin (b) $ 10,000 $ 6,740 CM ratio (b)÷(a) 0.633 0.571 ________________________________________ Since Product Q91I's CM ratio is greater than Product J53Z's, a shift in the sales mix toward Product Q91I will result in a decrease in the company's overall break-even point.

Deavila Inc. produces and sells two products. Data concerning those products for the most recent month appear below:

 

	Product Q91I				Product J53Z
Sales		$	15,800			$	11,800
Variable expenses		$	5,800			$	5,060

 

Fixed expenses for the entire company were $13,930.

 

Required:
a.	Determine the overall contribution margin ratio for the company. (Round your answer to 2 decimal places.)

 

Contribution margin ratio

b.	Determine the overall break-even point in total sales dollars for the company. (Round your intermediate calculation to 2 decimal places and final answer to the nearest dollar amount. Omit the "$" sign in your response.)

Break-even point

$

c.	If the sales mix shifts toward Product Q91I with no change in total sales, what will happen to the break-even point for the company?

It will result in a decrease in the company's overall break-even point.


Explanation:

a.

	Product Q91I		Product J53Z		Total
Sales	$	15,800	$	11,800	$	27,600
Variable expenses		5,800		5,060		10,860
Contribution margin	$	10,000	$	6,740		16,740
Fixed expenses						13,930
Net operating income					$	2,810

 

Overall CM ratio = Total contribution margin/Total sales = $16,740/$27,600 = 0.61

b.

Break-even point in total sales dollars = Fixed expenses/Overall CM ratio = $13,930/0.61 = $22,836

c.

	Product Q91I				Product J53Z
Sales (a)		$	15,800			$	11,800
Contribution margin (b)		$	10,000			$	6,740
CM ratio (b)÷(a)			0.633				0.571

Since Product Q91I's CM ratio is greater than Product J53Z's, a shift in the sales mix toward Product Q91I will result in a decrease in the company's overall break-even point.