Question

In 2016, Swifty Corporation sold 3000 units at $500 each. Variable expenses were $400 per unit, and fixed expenses were $270000. The same selling price, variable expenses, and fixed expenses are expected for 2017. What is Swifty’s break-even point in units for 2017?

Answer 1

Answer:

The answer is: Swifty Corporation's break even point for 2017 is 2,700 units sold

Explanation:

Swifty Corporation's break even point (BEP) can be calculated using the following formulas:

• BEP = fixed costs / contribution margin per unit
• contribution margin per unit = sales price - variable costs

The BEP for Swifty Corporation in 2017 is:

BEP = 270,000 / (500 - 400) = 270,000 / 100 = 2,700 units