Answer:
Results are below.
Explanation:
Giving the following information:
Selling price per unit $200
Contribution margin ratio 50%
Total fixed costs $275,000
Desired profit= $50,000
<u>First, we need to calculate the sales required to obtain the desired profit:</u>
Break-even point (dollars)= (fixed costs + desired profit) / contribution margin ratio
Break-even point (dollars)= (275,000 + 50,000) / 0.5
Break-even point (dollars)= $650,000
<u>Now, the number of units:</u>
Number of units= 650,000 / 200= 3,250
<u>Or, you can use the following formula:</u>
Break-even point in units= (fixed costs + desired profit) / contribution margin per unit
Break-even point in units= (275,000 + 50,000) / (0.5*200)
Break-even point in units= 3,250
