Question

Holdt Inc. produces and sells a single product. The selling price of the product is $230.00 per unit and its variable cost is $66.70 per unit. The fixed expense is $212,290 per month. The break-even in monthly unit sales is closest to:
A. 1,300
B. 3,183
C. 1,802
D. 923

Answer 1

Answer:

A. $1,300 units

Explanation:

Data provided

Fixed expenses = $212,290

Product price = $230.00

Variable cost = $66.70 per unit

The calculation of  break-even in monthly unit sales is shown below:-

Unit sales to break even = Fixed expenses ÷ Unit Contribution Margin

= $212,290 ÷ ($230.00 per unit - $66.70 per unit)

= $212,290 ÷ $163.30 per unit

= $1,300 units

Therefore for computing the units sales to break even we simply applied the above formula.