Maxson Products distributes a single product, a woven basket whose selling price is $8 and whose variable

Question:

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:
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 method.
4. Solve for the company’s break-even point in sales dollars using the method and the CM ratio.

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...