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Maxson Products break-even using equation method

Maxson Products distributes a single product, a woven basket whose selling price is $8 and whose variable cost is $6 per unit. The company's monthly fixed expense is $5,500.

Required:

Solve for the company's break-even point in unit sales using the equation method.
Solve for the company's break-even point in sales dollars using the equation method and the CM ratio.
Solve for the company's break-even point in unit sales using the contribution margin method.
Solve for the company's break-even point in sales dollars using the contribution margin method and the CM ratio.

Solution Preview

Solve for the company's break-even point in unit sales using the equation method. The equation method yields the break-even point in unit sales, Q, as follows:

Sales = Variable expenses + Fixed expenses + Profits
$8Q = $6Q + $5,500 + $0
$2Q = $5,500
Q = $5,500 รท $2 per basket
Q = 2,750 baskets

Solve for the company's break-even point in sales ...

Solution Summary

Maxson Products break-even using equation method are analyzed. The break-even point is discovered.

$2.19