Question

Summersville Production Company had the following projected information for the current year: Selling price per unit $150 Variable cost per unit $90 Total fixed costs $300,000 What level of sales dollars is needed to obtain a target before-tax profit of $75,000

Answer 1

Answer:

Break-even point in units= 6,250

Explanation:

Giving the following formula:

selling price per unit $150

Variable cost per unit $90

Total fixed costs $300,000

Desired profit $75,000

To calculate the number of units to be sold, we need to use the following formula:

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

Break-even point in units= (300,000 + 75,000) / (150 - 90)

Break-even point in units= 6,250