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? 81 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?

Hester
4.8
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%.

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