EXERCISE 6-13 (30 MINUTES)

1. Sales = Variable expenses + Fixed expenses + Profits

$50Q = $32Q + $108,000 + $0

$18Q = $108,000

Q = $108,000 ÷ $18 per stove

Q = 6,000 stoves, or at $50 per stove, $300,000 in sales.

Alternative solution:

Fixed expenses

Break-even point= in unit sales Unit contribution margin

$108,000

= =6,000 stoves

$18.00 per stove

or at $50 per stove, $300,000 in sales.