arget Profit Scrushy Company sells a product for $150 per unit. The variable cost is $110 per unit, and fixed costs are $200,000

Question

3 years ago

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arget Profit Scrushy Company sells a product for $150 per unit. The variable cost is $110 per unit, and fixed costs are $200,000

. Determine (a) the break-even point in sales units and (b) the break-even point in sales units if the company desires a target profit of $50,000. a. Break-even point in sales units fill in the blank 1 units b. Break-even point in sales units if the company desires a target profit of $50,000 fill in the blank 2 units

Business

1 answer:

aleksklad [387] · Answer 1 · 2022-09-28T22:55:20+03:00

Answer:

Results are below.

Explanation:

Giving the following information:

Selling price per unit= $150

The variable cost is $110 per unit, and fixed costs are $200,000.

To calculate the break-even point in units, we need to use the following formula:

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

Break-even point in units= 200,000 / (150 - 110)

Break-even point in units= 5,000 units

Now, the desired profit is $50,000:

Break-even point in units= (fixed costs + desired profit) / contribution margin per unit

Break-even point in units= (200,000 + 50,000) / 40

Break-even point in units= 6,250