Exercise 6-5 compute the break even point (lo5)
Mauro products has a single product, a woven basket whose selling price is $15 and whose variable cost is $12 per unit, the company’s monthly fixed expenses are $4200
Requied:
1. solve for the company’s break even point in unit sales using the equation method. 2. solve for the company’s break even point in sales dollars using the equation method and the CM ratio. 3. solve for the company’s break even point in unit sales using the contribution margin method. 4. solve for the company’s break even point in sales dollars using the contribution margin method and the CM ratio.

Solution:
1-

Sales = Variable expenses + Fixed expenses + Profits

15 Q = 12 Q + 4200 + 0

3 Q = 4200

Q = 4200 / 3

Q = 1400 Unit

2-
X = 0.80 X + 4200 + 0
0.20 X = 4200

X = 4200 / 0.20

X = 21000 $

4200 / 0.20 = 21000

3-
= Fixed expenses / CM
4200 / 3 = 1400

4-
= Fixed expenses / CM
= 4200 / 0.20
= 21000

4200 / 0.20 = 21000

Exercise 6-15
Menlo company manufactures and sell a single product, the company’s sales and expenses for last quarter follow:

|Sales |$450,000 |$30 |
|Less variable expenses |180,000 |12 |
|Contribution margin |270,000 |$18 |
|Less fixed expenses |216,000 | |
|Net operating income |$ 54,000 | |

Requied: 1. What is the quarterly break even point in units sold and in sales dollars. 2. without resorting to computations, what is the total contribution margin at the break even point? 3. how many unit