Question

Radisson Enterprises sells a product for $69 per unit. The variable cost is $40 per unit, while fixed costs are $206,045. Determine (a) the break-even point in sales units and (b) the break-even point if the selling price were increased to $75 per unit.

Answer 1

Answer:

1. 7,105 units

2. 5,887 units

Explanation:

The computation of given question is shown below:-

a. Contribution margin per unit = Sale price - Variable cost

= $69 - $40

= $29

Break-even point in sales units = Fixed costs ÷ Contribution margin per unit

= $206,045 ÷ 29

= 7,105 units

b. Contribution margin per unit

= $75 - $40 = $35

Break-even point = Fixed cost ÷ Contribution margin per unit

$206,045 ÷ $35

= 5,887 units