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# Maxson Products break-even using equation method

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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 ÷ \$2 per basket