Question

Regency Inc. makes disposable cap and gown sets for graduations. Each cap and gown set sells for $15. The average variable cost for manufacturing ten cap and gown sets is $100. Total fixed costs for the year equal $65,000. Calculate the break-even point in units.

Answer 1

Answer:

The Breakeven point is 13,000 units.

Explanation:

The breakeven point can be found from the following equation:

Breakeven units = Fixed Costs / Contribution Per unit

Here, contribution per unit is $5 per unit which is the difference between the selling price and variable costs per unit.

The fixed cost here is $65000.

By putting the values in the above equation, we have:

Breakeven units = $65,000 / $5 per unit = 13,000 units