Question

N Corp has a variable cost per unit of $1.20, and the lease payment on the production facility runs $4,200 per month. N Corp sells the units at $4.60 and has depreciation equal to $225. What is the amount of units that N Corp needs in order to break-even

Answer 1

Answer:

1,301 units.

Explanation:

With regards to the above, we know that break even level is

= ( FC + Depreciation ) / Contribution margin

FC = $4,200

Depreciation = $225

Contribution margin = P - V, where P = $4.60 , V = $1.20

Therefore,

Break even level = ($4,200 + $225) / $4.60 - $1.20

Break even level = $4,425 / $3.40

Break even level = 1,301 units

Hence, the amount of units N corp needs in order to break even is 1,301 units