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bridgeport inc, sells two product lines. the sales mix of the product lines is: standard, 60%; and deluxe, 40%. the contribution margin ratio of each line is: standard, 40%; and deluxe, 45%. bridgeport's fixed costs total $1,354,500. what is the dollar amount of deluxe sales at the break-even point? dollar amount of deluxe sales at the break-even point

Respuesta :

The dollar amount of deluxe sales at the break-even point is $3225000

When a business hits the break-even threshold, its costs and revenues will be equal, and it will be a no-profit, no-loss scenario. A business can determine the break-even point to determine when it or one of its products will begin to turn a profit. A corporation is running at a loss if its revenue is less than the break-even threshold. If it is higher than that, it is making money. The following formula is used to determine the break-even point:

BEP = Fixed cost/Contribution margin ratio

Computing the break-even point:

BEP ($) = 1,354,500/ (0.60 * 0.4 + 0.4 * 0.45)

BEP ($) = 1,354,500/ (.24 + 0.18)

BEP ($) = 1,354,500/ (0.42)

BEP ($) = 3225000

Learn more about break-even point:

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