Answer:
Break-even point= 11,500 units
Explanation:
Giving the following information:
Selling price= $20.00 per unit.
Fixed expenses= $63,000 per year.
Break-even point= 9,000 units to break even.
Desired profit= $17,500
First, we need to calculate the unitary variable cost:
Break-even point= fixed costs/ contribution margin
9,000= 63,000 / (20 - unitary variable cost)
9,000*20 - 9,000x= 63,000
180,000 - 63,000= 9,000x
117,000/9,000=x
13= unitary variable cost
Now, we can calculate the number of units:
Break-even point= (fixed costs + desired profit) / contribution margin
Break-even point= (63,000 + 17,500) / (20 - 13)
Break-even point= 11,500 units
