Question

Multiple Choice Question 115 Sunland Company sells MP3 players for $50 each. Variable costs are $40 per unit, and fixed costs total $120000. What sales are needed by Sunland to break even?

Answer 1

Answer:

The amount of $600,000 sales require to be at break -even

Explanation:

The amount sales require to be at break -even is computed as:

Units × Price = Variable cost × Units + Fixed Cost

where

Units be X

Price is $50

Variable cost os $40 per unit

Fixed cost amounts to $120,000

So, putting the values above:

X × $50 = $40 × X + $120,000

$50 X = $40X + $120,0000

$50X - $40X = $120,000

$10X = $120,000

X = $120,000 / $10

X = 12,000

So, the sales amounts to as:

Sales = Units × $50

Sales = $12,000 × $50

Sales = $600,000