Question

Break-Even Point Freese Inc. sells a product for 650 per unit. The variable cost is 455 per unit, while fixed costs are 4,290,000. Determine (a) the break-even point in sales units and (b) the break-even point if the selling price were increased to $655 per unit. a. Break-even point in sales unitsfill in the blank 1 units b. Break-even point if the selling price were increased to $655 per unit

Answer 1

Answer:

Results are below.

Explanation:

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= 4,290,000 / (650 - 455)

Break-even point in units= 22,000

Now, if the selling price is $655, the break-even point in dollars is:

Break-even point (dollars)= fixed costs/ contribution margin ratio

Break-even point (dollars)= 4,290,000 / [(655 - 455) / 655]

Break-even point (dollars)= $14,049,750