Wednesday, April 15, 2009

Break Even Point and Total Contribution algebra problem for this accounting/business management scenario.?

The Sole Shoe Store currently stocks 3 lines of ladies%26#039; shoes. Here is the data for each line:





Flats:


Selling Price - $12


Variable Cost - $6


Sales Distribution - $20,000





Golf:


Selling Price - $20


Variable Cost - $12


Sales Distribution - $10,000





Dress:


Selling Price - $24


Variable Cost - $6


Sales Distribution - $70,000





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#1) What is the TOTAL CONTRIBUTION(%) per overall sales dollar?





#2) What is the Break Even Point in dollars?


A: $42,105


B: $46,281


C: $50,450


D: $84,084


E: None of the above





***Please explain your reasoning, not just give answers. Thanks!***

Break Even Point and Total Contribution algebra problem for this accounting/business management scenario.?
Total contribution per overall sales dollar is equal to the Sales prices less the variable costs





1)


Flats: (12-6)/12


Golf: (20-12)/20


Dress: (24-6)/24


The sales mix is 20/10/70.


So: [20%*(5/12) + 10%(8/20) + 70%(18/24)] = 64.833%








2) Break even is when the contribution equals the fixed costs. We don%26#039;t know what the fixed costs are, so I can%26#039;t answer this question.



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