# Question & Answer: Praveen Co. manufactures and markets a number of rope products. Management is considering the future of Product XT a special…..

Praveen Co. manufactures and markets a number of rope products. Management is considering the future of Product XT a special rope for hang gliding, that has not been as profitable as planned. Since Product XT is manufactured and marketed Independently of the other products, its total costs can be precisely measured. Next year’s plans call for a \$220 selling price per 100 yards of XT rope. Its fixed costs for the year are expected to be \$413,600, up to a maximum capacity of 550,000 yards of rope. Forecasted variable costs are \$132 per 100 yards of XT rope. Part 1 of 2 2 points 1. Estimate Product XT’s break-even polnt In terms of sales units and sales dollars. (1 unit- 100 yards) (Do not round Intermedlate calculations.) Contribution margin per 100 yds eBook Contribution margin Prin ontribution margin ratio – Contribution margin ratio Contribution margin ratio Choose Numerator: Choose Denominator stimate Product XT’s break-even point in terms of sales units. (1 unit 100 yards) Choose Numerator: Choose Denominator: Break-even units 1(b) Estimate Product XT’s break-even point in terms of sales dollars Break-even doll Choose Numerat Choose Denominator

## Expert Answer

 Capacity 550000 yards 5500 unit Fixed Cost 413600 a) Contribution Margin Sales Price Per unit 220 Less Variable Cost per Unit 132 Contribution margin 88 b) Contribution Margin Ratio Numerator Denominator Contribution Margin Ratio Contribution Margin Sales Price Per unit Contribution Margin Ratio 88 220 40.00% 1 a) Numerator Denominator Break Even Units Fixed Cost Contribution per unit Break Even Units 413600 88 4700 units 1 b) Numerator Denominator Break Even Units Fixed Cost Contribution Margin Ratio Break Even Units 413600 40% \$ 1034000