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Rider company's product has a selling price of £40 per unit and variable expenses of £15 per unit. The company's fixed expenses total £30000 per year. The company's break even point in terms of total pound sales is

Answer :

Answer: $48000

Explanation:

To get the company's break even point in terms of total pound sales, we have to first get the contribution margin ratio which will be:

= Unit contribution margin / Unit selling price

= ($40 - $15) / $40

= $25/$40

= 0.625

Then, the dollar sales to break even will then be:

= Fixed expenses / CM ratio

= $30,000 / 0.625

= $48,000

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