Buffalo Company makes and sells shampoo. Each unit requires $1.40 labor costs, material costs per unit are $0.90 and other variable costs are $0.30. It sells shampoo for $4.45 to retailers. Fixed costs are $15,000. It sold 25,000 units in the current month. What is the Break-Even point in units? What is the Break-Even point in dollars? What is the contribution margin of Buffalo Company?

Name: Solved: Buffalo Company makes and sells shampoo. Each unit requires $1.40 labor costs, material costs per unit are $0.90 and other variable costs are $0.30. It sells shampoo for $4.45 to retailers. Fixed costs are $15,000. It sold 25,000 units in the current month. What is the Break-Even point in units? What is the Break-Even point in dollars? What is the contribution margin of Buffalo Company? - MathMaster
Brand: MathMaster
Rating: 4.9 (81 reviews)

likes

403 views

Answer to a math question Buffalo Company makes and sells shampoo. Each unit requires $1.40 labor costs, material costs per unit are $0.90 and other variable costs are $0.30. It sells shampoo for $4.45 to retailers. Fixed costs are $15,000. It sold 25,000 units in the current month. What is the Break-Even point in units? What is the Break-Even point in dollars? What is the contribution margin of Buffalo Company?

$Expert avatar$

Hester

4.8

116 Answers

To find the Break-Even point in units, we need to determine the number of units the company needs to sell in order to cover all its costs.

Step 1: Calculate the total variable cost per unit:
Labor costs per unit: $1.40
Material costs per unit: $0.90
Other variable costs per unit: $0.30

Total variable cost per unit = Labor costs + Material costs + Other variable costs = $1.40 + $0.90 + $0.30 = $2.60

Step 2: Calculate the contribution margin per unit:
Selling price per unit: $4.45

Contribution margin per unit = Selling price per unit - Total variable cost per unit = $4.45 - $2.60 = $1.85

Step 3: Calculate the Break-Even point in units:
Fixed cost = $15,000
Contribution margin per unit = $1.85

Break-Even point in units = Fixed cost / Contribution margin per unit = $15,000 / $1.85

Answer: The Break-Even point in units is approximately 8,108 units.

To find the Break-Even point in dollars, we need to multiply the Break-Even point in units by the selling price per unit.

Break-Even point in dollars = Break-Even point in units * Selling price per unit = 8,108 units * $4.45

Answer: The Break-Even point in dollars is approximately $36,135.40.

To find the contribution margin of Buffalo Company, we need to calculate the contribution margin ratio.

Contribution margin ratio = Contribution margin per unit / Selling price per unit = $1.85 / $4.45

Answer: The contribution margin of Buffalo Company is approximately 41.57%.

Frequently asked questions (FAQs)

What is the derivative of the function f(x) = 3x^2 - ln(x) + sin(x)?

How many different ways can a committee of 4 students be chosen from a class of 25?

Math question: A triangle has side lengths of 5 cm, 12 cm, and 13 cm. Find the area using Heron’s Formula.

New questions in Mathematics

If you have a bag with 18 white balls and 2 black balls. What is the probability of drawing a white ball? And extracting a black one?

CASE 6-1: PREPARE A PRODUCTION PLAN: WHAT PROBLEMS ARRIVE? Midwest Plastics Company has conducted profit planning for several years. The president stated (with justification) that inventory control and planning had not been satisfactory, which was mainly due to poor planning of production and inventory budgets. Please analyze and provide recommendations, in detail, on the issue regarding the 20B profit plan, which is now being prepared. Their analysis and recommendations will be presented to the executive committee. Despite the seasonality factor, the sales department has been successful in developing a sales plan, on a monthly basis, for each year. The following sales data is available for 20B. 1. Sales plan summary for 20B: 2. Finished goods inventory, as of January 1, 20B, is 96,000 units. 3. Work-in-process inventory will remain constant. 4. Actual annual sales in 20A, including the estimate for December, were 350,000 units. 5. The average finished goods inventory during 20A was 70,000 units. IT IS REQUESTED. 1. Prepare the annual production budget, assuming that management policy is to budget ending finished goods inventory at a standard quantity, based on the ratio of historical sales of 20A to inventory turnover. 2. Prepare a schedule showing sales, production, and inventory levels for each month, assuming: 1) stable inventory, 2) stable production, and 3) recommended inventory-production levels. In developing your recommendations, assume that the following policies have been established: a) The president has set the policy that a maximum inventory of 85,000 units and a minimum inventory of 75,000 units should be used, except in abnormal circumstances. b) A stable level of production is definitely preferred, except that during the holiday season in July and August, production may be reduced by 25 percent. Likewise, a variation in production of 7.5 percent above and below the average level is acceptable. 3. What are the main problems faced by the company in production planning? Make your general recommendations.

A car tire can rotate at a frequency of 3000 revolutions per minute. Given that a typical tire radius is 0.5 m, what is the centripetal acceleration of the tire?

calculate the following vector based on its base vectors a= -18i,26j

Use the digits of 1,9,2,3 to come up with all the numbers 98 and 95

Suppose that a device has been created that launches objects at ground level and that its operation is modeled by the function h(x) = -4×² + 256x, with h being the height (in meters) and x being the distance (in meters) What is the maximum height that the object reaches?

A brass cube with an edge of 3 cm at 40 °C increased its volume to 27.12 cm3. What is the final temperature that achieves this increase?