[HelpHelpHelp :)]

Hi everyone! Can’t figure out where this number is coming from… anyone have a clue?

The Brieden Company sells rodaks for $6.00 per unit. Variable costs are $2.00 per unit. Fixed costs are $37,500. How many rodaks must be sold before income taxes of 15% of sales?

The answer is:

$37,500 + $0.15(S)

($6.00 – 2.00)/ $6.00

= $72,580 breakeven point in dollars

But how do they know how much sales are??

Thanks in advance! 🙂

The happiest people don't have the best of everything, they just MAKE the best of everything!

We can do it!! 🙂

[KaliKingz]

Break even in dollars= fixed costs/contribution margin ratio.
CMR= 3.10/6= .51667
37,500/.51667= 72,580

[HelpHelpHelp :)]

Where does 3.10 come from? Isn't CMR (6-2)/6?

The happiest people don't have the best of everything, they just MAKE the best of everything!

We can do it!! 🙂

[KaliKingz]

Variable costs are 2(given) plus the tax of 15%. 6*15%= .90
Total Variable Costs= $2.90
Contribution Margin= 6-2.90= $3.10

Does this make sence?

[HelpHelpHelp :)]

Ahhhhh, that makes a lot more sense than their explanation! Got it, thanks so much! 🙂

The happiest people don't have the best of everything, they just MAKE the best of everything!

We can do it!! 🙂

[Author]

Replies