Question

A company reports the following annual information for its single product: Sales price $48 per unit Variable costs $15 per unit Fixed costs $150,000 Units produced and sold 30,000 If fixed costs decreased to $120,000, what is the break-even point in units? Round up to the nearest whole unit.

Answer 1

Answer:

3,636 units

Explanation:

The computation of break-even point in units is shown below:-

Break-even point in units = Fixed cost decreased ÷ Contribution margin per unit

= ($120,000) ÷ ($48 - $15)

= $120,000 ÷ $33

= 3,636.36 units

or

= 3,636 units

Therefore for computing the break-even point in units we simply applied the above formula and ignore all other values as they are not relevant.