Question

Klinken Corporation’s contribution margin ratio on the sale of its most popular product is 40%. The product is priced at $97, annual fixed expenses are $885,000. 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.)

Answer 1

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