Summit Bicycles manufactures and sells e-bikes. The company…
Summit Bicycles manufactures and sells e-bikes. The company expects annual sales revenue of $910,000, with each bike selling for $1,300. Each unit requires direct materials of $420, direct labour of $180, and variable manufacturing overhead of $160. In addition, Summit incurs $40 of variable selling expenses per unit. Beyond these variable costs, the company reports $200,000 of manufacturing overhead that does not vary with production and $110,000 of selling and administrative expenses that are also not variable. Management is analyzing its contribution margin ratio, break-even sales, and margin of safety. What are Summit’s break-even sales in dollars?