Question

Klinken Corporation’s contribution margin ratio on the sale of its most popular product is 50%. The product is priced at $91, annual fixed expenses are $855,000. Management is evaluating two options: (1) lowering variable costs by 15% and (2) reducing fixed expenses by 15%.
Required:
Calculate the current level of break-even sales in dollars, as well as the break-even sales for the two options

Answer 1

Answer:

Klinken Corporation's contribution margin ratio on the sale of its most popular product is 50%. The product is priced at $91, annual fixed expenses are $855,000. Management is evaluating two options: (1) lowering variable costs by 15% and (2) reducing fixed expenses by 15%. Required: Calculate the current level of break-even sales in dollars, as well as the break-even sales for the two options. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) Break-even sales in dollars Option 1. Break-even sales in dollars Option 2. Break-even sales in dollars