A firm sells two products. Product R sells for $20; its variable cost is $6. Product S sells for $50; its variable cost is $30. Product R accounts for 60 percent of the firm's sales, while S accounts for 40 percent
The firm's fixed costs are $4 million annually. Calculate the firm's break-even point in dollars.
The contribution for product R is 70 percent of selling price, or 0.70; the contribution for product S is 0.40. The weighted contribution for R is .70 × .60 = .42; the weighted contribution for S is .40 × .40 = .16. The sum of the weighted contributions is 0.58. The break-even point is $4,000,000 / 0.58 = $6,896,552.
You might also like to view...
Never divide ________
A) the last word on a page B) a word less than two syllables C) a contraction D) all of the above
Financial accounting standards are known collectively as GAAP. What does that acronym stand for?
A. Generally Authorized Auditing Principles B. Generally Applied Accounting Procedures C. Generally Accepted Accounting Principles D. Governmentally Approved Accounting Practices
In rem jurisdiction refers to jurisdiction over the person
Indicate whether the statement is true or false
Which of the following is NOT a source of cash from financing activities?
A) Repayment of long-term debt B) Proceeds from issuance of common stock C) Proceeds for long-term borrowing D) Both A and C