Question

Microsoft sells its wireless laser desktop mouse and keyboard for $70. Unit variable costs are$45.60 and fixed costs associated with this product total $277,200.
a. What is the break-even point in units?

b. What is the net income or loss if 40,000 units are sold?

Answer 1

Answer:

11,361 units and profit $698,800.00

Explanation:

The break-even point is obtained by dividing fixed costs by contribution margin per unit.

Break-even =fixed costs/contribution margin per unit

In this case, fixed costs are $277,200.

Contribution margin per unit = selling price- variable cost

= $70 - $45.60

=$24.60

Break-even point in units will be

=$277,200/$24.60

=11,361 units

Net income after sales of 40,000 units

Total revenue =sales x volume

=$70 x 40,000

=$2,800,000.00

net income will be $2,800,000.00 -( variable costs+ fixed costs)

=$2,800,000.00- {($45.60 x 40,000) + $277,200}

=$2,8000,000.00 -($1,824,000.00 + $ 277,200)

=$2,8000,000.00- $2,101,200.00  

=$698,800.00  

A profit of $698,800.00