Question

Outback Outfitters sells recreational equipment. One of the company's products, a small camp stove, sells for $50 per unit. The contribution margin per camp stove is 36% while the fixed expenses associated with the stove total $108,000 per month. Compute the break-even point in unit sales and in dollar sales. Show all computations.

Answer 1

Answer:

Break-even point in units= 6,000

Explanation:

Giving the following information:

Selling price= $50

Fixed csots= $108,000

Contribution margin ratio= 0.36

First, we need to calculate the contribution margin per unit:

Contribution margin per unit= 50*0.36= $18

To calculate the break-even point in units, we need to use the following formula:

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 108,000 / 18

Break-even point in units= 6,000