Question

Karlik Enterprises distributes a single product whose selling price is $15.70 and whose variable expense is $10.30 per unit. The company’s monthly fixed expense is $21,060. Required: 2. Calculate the company’s break-even point in unit sales.

Answer 1

Answer: Company’s break-even point in unit sales is 3900 units

Explanation:

Given :

Selling Price (SP) = $ 15.70

Variable expense per unit (VC) = $10.30

Fixed expense = $21,060

Now,

Contribution per unit = SP - VC = $15.70 - $10.30 = $5.40

Break-even point in unit sales is given as :

= $\frac{Fixed expense}{Contribution per unit }$

= 21060/5.40

=3900 units