Question

Crane Company has a unit selling price of $500, variable costs per unit of $260, and fixed costs of $184,800. Compute the break-even point in units using (a) the mathematical equation and (b) unit contribution margin.

Answer 1

Answer:

Break-even point in units= 770

Explanation:

Giving the following information:

Selling price= $500

Unitary variable cost= $260

Fixed costs= $184,800

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

Net income= unit contribution margin*x - fixed costs

x= number of units

0= (500 - 260)*x - 184,800

184,800/240 = x

770=x

Now, under the unit contribution margin method:

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

Break-even point in units= 184,800/240

Break-even point in units= 770