Question

If fixed costs are $240,000, the unit selling price is $36, and the unit variable costs are $20, what is the break-even sales (units)?

Answer 1

The break-even sales (units) is 15000;

240000/(36-20)

At this moment, fixed and variable costs will be completely covered by sales revenue (income).

Be = FC/(SP - VC) FC = fixed costs SP = sale price VC = variable costs

More about break-even sales:

The revenue level at which a company makes no profit is known as break even sales. This sales quantity completely offsets all of the variable costs related to the sales as well as the underlying fixed costs of a business.

Knowing the break even sales level gives managers a benchmark for the minimal volume of sales that must be produced throughout each reporting period to prevent losses.

For instance, the break even level can be used to reduce fixed expenses to meet the anticipated level of future sales if a business slump is anticipated.

Learn more about break-even sales here:

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