Question

Current Attempt in Progress Ferris, Inc. has a unit selling price of $500, variable cost per unit of $300, and fixed costs of $260,000. Compute the break-even point in units and in sales dollars. Break-even point (in units) units Break-even point (in dollar) $

Answer 1

Answer:

Break-even point (in units) 1300 units

Break-even point (in dollar) $650,000

Explanation:

The break-even point is the level of sales that is required to cover all fixed costs of the firm and the break-even point in units can be computed thus:

break-even point in units=fixed costs/contribution margin per unit

fixed costs=$260,000

contribution margin per unit=selling price-variable cost

contribution margin per unit=$500-$300

contribution margin per unit=$200

break-even point in units=$260,000/$200

break-even point in units=1,300 units

units Break-even point (in dollar) $=break-even point in units*selling price

break-even point in units=1300*$500

break-even point in units=$650,000