Answer:
a)Break-even point = 6,800 units
b) Break-even point =5780 units
Explanation:
<em>Break-even point is the level of activity that achieves no profit or loss. At this level profit is zero because the the total revenue is equal to total cost.
</em>
<em>The break-even point is calculated as </em>
<em>Units to achieve target profit = (Total general fixed cost for the period)/ contribution per unit
</em>
Contribution per unit = Selling Price - Variable cost
Contribution per unit = 67 - 33 = 34
Fixed cost =231,200
So the units requited to achieve break-even point:
Break-even point = 231,200/34 = 6,800 units
Break-even point = 6,800 units
b) If the selling price wete increased to 73
The break-even point = 231,200/ (73- 33) = 5,780 units
Break-even point =5780 units
