Question

Boss Enterprises currently sells its products for per unit. Management is contemplating a ​% increase in the selling price for the next year. Variable costs are currently ​% of sales revenue and are not expected to change next year. Fixed expenses are per year. What is the breakeven point in units at the current selling​ price?

Answer 1

Answer: 5,000 units

Explanation:

Break-even points in units is calculated by;

= Fixed Costs / Contribution Margin per unit

Contribution Margin

= Sales - Variable Costs

= $40 - ( 40 * 40%)

= 40 - 16

= $24 per unit

Breakeven point

= 120,000/24

= 5,000 units