Ruiz Company Produces and Sells a Product That Has Variable

question 23

Short Answer

Ruiz Company produces and sells a product that has variable costs of $50 and a selling price of $90. Its current sales total $270,000 per month. Fixed manufacturing costs total $40,000 per month and fixed selling and administrative costs total $35,000 per month.
Required:Compute the company's current break-even point in units.Compute the company's current income and margin of safety in dollars.

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Definitions:

Fixed Maintenance Cost

Costs that do not fluctuate with the level of production or sales, such as salaries for maintenance staff or contracts for equipment service, remaining constant over a period.

Machine-Hours

A unit of measure representing the operation of machinery for one hour, often used in manufacturing and production cost analysis.

Contribution Margin

The sum left from the revenue of sales once variable costs have been subtracted, utilized to pay for fixed expenses and create profit.

Administrative Expenses

Costs related to the general administration of a business, such as salaries of executive personnel, accounting, and human resources.