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Eastwick produces and sells three products. Last month's results are as follows: P1 P2 P3 Revenues $ 100,000 $ 200,000 $ 200,000 Variable costs 40,000 140,000 80,000 Fixed costs total $200,000. What is Eastwick's break-even sales volume

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abiolataiwo2015

Answer:

$416,667

Explanation:

Calculation to determine Eastwick's break-even sales volume

First step is to calculate the Contribution margin (CM)

CM = ($100,000 – $40,000) + ($200,000 – $140,000) + ($200,000 – $80,000)

CM=$60,000+$60,000+$120,000

CM = $240,000

Second step is to calculate CM%

CM% = $240,000/$500,000

CM% = 48%

Now let calculate the Break-even sales volume

Break-even sales volume = $200,000/.48

Break-even sales volume = $416,667

Therefore Break-even sales volume is $416,667

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