The sales mix percentages for Guillen's Chicago and Charlotte Divisions are 70% and 30%. The contribution margin ratios are Chicago (40%) and Charlotte (30%). Fixed costs are $555,000. What is Guillen's break-even point in dollars? a. $194,250 b. $1,500,000 c. $1,585,714 d. $1,681,818

The sales mix percentages for Guillen's Chicago and Charlotte Divisions are 70% and 30%. The contribution margin ratios are Chicago (40%) and Charlotte (30%). Fixed costs are $555,000. What is Guillen's break-even point in dollars? a. $194,250 b. $1,500,000 c. $1,585,714 d. $1,681,818

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter8: Cost Analysis

Section: Chapter Questions

Problem 2.1CE

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Concept explainers

Cost of Production

In economic theory, production costs are the costs incurred by an industrial organization when it engineers a project or provides a service that generates revenue and benefits. Labor costs, raw materials, consumable manufacturing costs, and general overhead sum up, accounting for production costs. Total cost data is calculated by combining total direct costs of materials, labor costs, and total production costs.

Question

The sales mix percentages for Guillen's Chicago and Charlotte Divisions are 70% and 30%. The contribution margin ratios are Chicago (40%) and Charlotte (30%). Fixed costs are $555,000.

What is Guillen's break-even point in dollars?

a. $194,250

b. $1,500,000

c. $1,585,714

d. $1,681,818

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