Question

Kodera Technology is considering introducing a new product, which will require buying new equipment for a monthly payment of $5,000. Each unit produced can be sold for $20.00. The company incurs a variable cost of $8.00 per unit. How many units must Kodera sell each month to breakeven? (2 pts)

Answer 1

Answer:

417 units

Explanation:

The formula to compute the break-even point in units is shown below:

= (Fixed expenses ) ÷ (Contribution margin per unit)  

where,  

Contribution margin per unit = Selling price per unit - Variable expense per unit  

So, the break-even point in units is

= ($5,000) ÷ ($20 - $8)

= $5,000 ÷ $12

= 417 units

So, the 417 units is to be sold for break-even