Question

Longstreet inc. has fixed operating costs of $300,000, variable costs of $2.50 per unit produced, and its product sells for $3.70 per unit. what is the company's break-even point, i.e., at what unit sales volume would income equal costs?

Answer 1

Operating cost is $30000 
 Variable cost per unit is $ 2.50 
 Selling cost per unit is $3.70   
 Income for per unit sold = selling cost - variable cost 
   = 3.70 - 2.50 = 1.20 
 Income for per unit sold is $1.20 
 The value of Sales volume to equal the cost can be obtained by the following formula   
  Sales volume * Income per unit sold = operating cost 
  sales volume * 1.20 = 300000 
 sales volume = 3000000/1.20 = 250000    Hence Total sales volume unit to equal the operating cost is 250000 units