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Chillmax Company now sells both pairs of shoes and carryalls
Chillmax Company now sells both pairs of shoes and carryalls. Next year, Chillmax expects to produce total revenue of $210,000 and incur total variable cost of $81,375. Total fixed cost is expected to be $91,500. Required: Calculate the break-even point in sales dollars for Chillmax. ( Note: Round the contribution margin ratio to four decimal places and sales to the nearest dollar.)
Expert Solution
Computation of the break even point in sales dollars:-
Contribution margin = Total sales revenue - Total variable cost
= $210,000 - $81,375
= $128,625
Contribution margin ratio = Contribution margin / Total sales revenue
= $128,625 / $210,000
= 0.6125
Break even point in sales dollars = Total fixed cost / Contribution margin ratio
= $91,500 / 0.6125
= $149,387.76 Or $149,388
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