Answer:
Break-even point in units= 54,000 units
Explanation:
Giving the following information:
Knoll, Inc. currently sells 72,000 units a month for $126 each, has variable costs of $96 per unit, and fixed costs of $162,000. Knoll is considering increasing the price of its units to $136 per unit.
First, we need to calculate the current income:
Sales= 72,000*126= 9,072,000
Variable cost= 72,000*96= (6,912,000)
Contribution margin= 2,160,000
Fixed costs= (162,000)
Net operating income= 2,000,000
Now, we need to use the break-even point in units incorporating the desired profit of $2,000,000:
Break-even point in units= (fixed costs + desired profit)/ contribution margin per unit
Break-even point in units= (162,000 + 2,000,000) / (136 - 96)
Break-even point in units= 54,000 units
