Answer:
Q= TFC/(SP-VC)
Break Even Point in Units = 1116.67 ≅1117
Explanation:
Dilts Company
Sales price $630,
Variable costs per unit $380,
Contribution Margin 300
Fixed costs $335,000
The Mathematical Equation
Q= No of units
Total Revenue= TR
Total Cost = TC
Total Fixed Costs= TFC
Variable Costs= VC
Sales Price = SP
Total Revenue= TR= Price Per unit * No Of units = SP * Q
Total Cost = TC = Total Fixed Costs + Variable Costs ( Number of Units)=
TC= TFC + VC*Q
Now according to break even the total revenue must equal the the total costs
TR= TC
SP*Q= TFC + VC*Q
On re arranging the above equation
SP*Q- VC*Q= TFC
Q(SP-VC)= TFC
Q= TFC/(SP-VC)
Number of Units=Total Fixed Costs/Sales Price- Variable Costs
b) Break Even Point in units = Fixed Costs/ Contribution Margin per unit
Break Even Point in units = Fixed Costs/ (Sales- Variable cost)
Break Even Point in Units = $335,000/ 300= 1116.67 ≅1117
