Question

Use the following information to determine the break-even point in sales dollars: Unit sales 50,000 Units Dollar sales $ 500,000 Fixed costs $ 204,000 Variable costs $ 187,500

Answer 1

Answer:

$326,400

Explanation:

The breakeven point is the number of units of  a product a company must sell for its total revenue to be equal to its total cost. The cost elements are fixed and variable. At breakeven, profit/loss is zero hence revenue or sales is equal to cost.

From the information given,

Variable cost per unit = $ 187,500/50,000

= $3.75

Sales per unit = $500,000/50,000

= $10

let the number of units sold at breakeven point be x

10x - 3.75x - 204,000 =  0

6.25x = 204,000

x = 32,640

Breakeven sales = 32,640 * $10

= $326,400