1. The overall break-even sales can be determined using the CM ratio.
Velcro Metal Nylon Total
Sales ... $165,000 $300,000 $340,000 $805,000
Variable expenses ... 125,000 140,000 100,000 365,000
Contribution margin ... $ 40,000 $160,000 $240,000 440,000
Fixed expenses ... 400,000
Net operating income ... $ 40,000
Contribution margin $440,000
CM ratio= 0.5466
Sales = $805,000 =
Fixed expenses $400,000
Break-even point in= $732,000 total sales dollars CM ratio = 0.5466 = (rounded)
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