Compute the break-even point in dollar sales

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Reference no: EM131033789

Problem: Jetson Co. sold 20,000 units of its only product and incurred a $ 50,000 loss (intoning taxes) for the current year as shown here. During a planning session for year 2012's activities, the production manager's notes that variable cost can be reduced 50% by installing a machine that automates several operations. To obtain these saving, the company must increase its annual fixed costs by $150,000. The maximum output capacity of the company is 40,000 units per year.

JETSON COMPANY

Contribution Margin Income Statement

For Year Ended December 31, 2011

Sales	$750,000
Variable costs	600,000
Contribution margin	150,000
Fixed costs	200,000
Net loss	$(50,000)

Required:

1. Compute the break-even point in dollar sales for year 2011.

Reference no: EM131033789

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