Hamernik, Inc., produces and sells a single product whose selling price is $240.00 per unit and whose variable expense is $72.00 per unit. The company's fixed expense is $372,960 per month. Required:Determine the monthly break-even in either unit or total dollar sales.
What will be an ideal response?
| Per Unit | Percent of Sales | |||||
| Selling price per unit | $ | 240.00 | 100 | % | ||
| Variable expense per unit | 72.00 | 30 | % | |||
| Contribution margin per unit and contribution margin ratio | $ | 168.00 | 70 | % | ||
Unit sales to break even = Fixed expenses ÷ Unit CM = $372,960 ÷ $168 per unit = 2,220 units
Dollar sales to break even = Fixed expenses ÷ CM ratio = $372,960 ÷ 0.70 = $532,800
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