Question

A product sells for $30 per unit and has variable costs of $15.50 per unit. The fixed costs are $1,015,000. If the variable costs per unit were to decrease to $14.60 per unit, fixed costs increase to $1,078,000, and the selling price does not change, break-even point in units would:

Answer 1

Answer:

70,000 units

Explanation:

Selling price per unit = $30

Variable cost per unit = $14.60

Contribution margin per unit = $30 - $14.60 = $15.40

Fixed cost = $1,078,000

Break-even point in units = Fixed cost ÷ Contribution margin per unit = $1,078,000 ÷ $15.40 = 70,000 units

Therefore,  break-even point in units would 70,000 units.