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Ad libitum [116K]
3 years ago
15

Locus Company has total fixed costs of $117,000. Its product sells for $51 per unit and variable costs amount to $26 per unit. N

ext year Locus Company wishes to earn a pretax income that equals 50% of fixed costs. How many units must be sold to achieve this target income level
Business
1 answer:
Zina [86]3 years ago
8 0

Answer:

Break-even point in units= 7,020 units

Explanation:

Giving the following information:

Fixed costs= $117,000

Selling price= $51

Unitary variable cost= $26

Desired profit= $58,500

<u>To calculate the number of units to be sold, we need to use the following formula:</u>

Break-even point in units= (fixed costs + desired profit)/ contribution margin per unit

Break-even point in units= (117,000 + 58,500) / (51 - 26)

Break-even point in units= 7,020 units

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