Question

Waterfall Company sells a product for $150 per unit. The variable cost is $80 per unit, and fixed costs are $270,000. Determine the following: Round answers to the nearest whole number. a. Break-even point in sales units units b. Break-even points in sales units if the company desires a target profit of $36,000 units

Answer 1

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

Waterfall Company sells a product for $150 per unit.

The variable cost is $80 per unit

The fixed costs are $270,000.

To calculate the break-even point in units, we need to use the following formula:

Break-even point= fixed costs/ contribution margin

Break-even point= 270,000/ (150 - 80)= 3,857 units

Now, we have to include the desired profit in the formula:

Break-even point= (fixed costs + desired profit)/ contribution margin

Break-even point= (270,000 + 36,000)/ 70= 4,371 units

Answer 2

Answer: A. 3857 units B.) 4371 units

Explanation:

GIVEN THE FOLLOWING ;

PRICE PER UNIT = $150

VARIABLE COST PER UNIT = $80

FIXED COST = $270,000

BREAK EVEN POINT (SALES UNIT):

Fixed cost ÷ Contribution margin

$270,000 ÷ ($150 - $80)

$270,000 ÷ $70 = 3857.14 units

B.) BREAK EVEN POINT IN SALES IF TARGET PROFIT = $36000

BREAK EVEN POINT ( SALES UNIT):

(Fixed cost + target profit) ÷ Contribution margin

$(270,000 + 36,000) ÷ $(150 - 80)

$306,000 ÷ $70 = 4371.42 units