Question

ABC Company sells its 4G SD memory card for $ 15 per unit. The unit production cost is $ 3 and unit labor cost is $ 5. The packaging and shipping costs additional $ 3 per unit. The annual manufacturing costs are $ 60,000 and the promotion and advertising cost is $40,000. What is the $BEP for the company?

Answer 1

Answer:

$93,750

Explanation:

Contribution margin=15-(5+3+3)=4

Fixed Costs=$60,000+$40,000=$100,000

Break even point  in units=$100,000/4=25,000

Break even point in $=25,000/(4/15)=$93,750

Answer 2

Answer:

$375,000

Explanation:

we must first calculate the break even point in units:

break even point in units = total fixed costs / contribution margin per unit

• total fixed costs = $60,000 + $40,000 = $100,000
• contribution margin = sales price - total costs per unit = $15 - ($3 + $5 + $3) = $15 - $11 = $4

break even point in units = $100,000 / $4 = 25,000 units

break even point in $ = break even points in units x sales price per unit = 25,000 units x $15 per unit = $375,000