Mcdale Incorporated produces and sells two products. Data concerning those products for the most recent month appear below:

 	Product I49V	Product Z50U
Sales	$ 44,000	$ 49,000
Variable expenses	$ 13,200	$ 28,650
The fixed expenses of the entire company were $38,980. The break-even point for the entire company is closest to:


Multiple Choice

$38,980


$46,100


$70,873


$80,830

To determine the break-even point for McDale Incorporated, we need to calculate the contribution margin for each product and then apply that to the company’s fixed expenses. The break-even point is where total contribution margin equals fixed expenses.

### Step 1: Calculate Contribution Margin for Each Product
The contribution margin (CM) for each product is calculated by subtracting the variable expenses from the sales revenue.

- **Product I49V**
  \[
  \text{Contribution Margin} = \text{Sales} - \text{Variable Expenses} = 44,000 - 13,200 = 30,800
  \]

- **Product Z50U**
  \[
  \text{Contribution Margin} = \text{Sales} - \text{Variable Expenses} = 49,000 - 28,650 = 20,350
  \]

### Step 2: Calculate the Total Sales and Total Contribution Margin
- **Total Sales** = $ 44,000 + 49,000 = 93,000 $
- **Total Contribution Margin** = $ 30,800 + 20,350 = 51,150 $

### Step 3: Calculate the Contribution Margin Ratio
The contribution margin ratio (CM ratio) helps us understand how much of each dollar of sales contributes to covering fixed expenses.

\[
\text{CM Ratio} = \frac{\text{Total Contribution Margin}}{\text{Total Sales}} = \frac{51,150}{93,000} \approx 0.55
\]

### Step 4: Calculate the Break-Even Point in Dollars
To find the break-even point in dollars, we divide the fixed expenses by the CM ratio.

\[
\text{Break-even Sales} = \frac{\text{Fixed Expenses}}{\text{CM Ratio}} = \frac{38,980}{0.55} \approx 70,873
\]

### Answer
The break-even point for the entire company is closest to **$70,873**.

Would you like further details or have any questions?

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Here are five related questions for additional practice:

1. How would the break-even point change if fixed expenses increased?
2. What is the impact on the break-even point if variable expenses for Product Z50U decrease?
3. How would introducing a new product with a higher contribution margin affect the break-even point?
4. How would we calculate the break-even point in units for each product?
5. How does the contribution margin ratio help in analyzing profitability?

**Tip:** To lower a company's break-even point, consider increasing prices or reducing variable expenses.

Mcdale Incorporated produces and sells two products. Data concerning those products for the most recent month appear below:

Product I49V Product Z50U
Sales $ 44,000 $ 49,000
Variable expenses $ 13,200 $ 28,650
The fixed expenses of the entire company were $38,980. The break-even point for the entire company is closest to:

Multiple Choice

$38,980
$46,100
$70,873
$80,830

Learn how to calculate the break-even point for McDale Incorporated based on sales data and variable expenses for products I49V and Z50U. This step-by-step solution covers the concepts of contribution margin, break-even analysis, and ratio calculation. Suitable for students in Grades 10-12.

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