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A manufacturing process has a fixed cost of $250,000 per month. Each unit of product being produced contains $15 worth of material and $35 in labor. Each finished product will sell for $100. How many units
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A manufacturing process has a fixed cost of $250,000 per month. Each unit of product being produced contains $15 worth of material and $35 in labor. Each finished product will sell for $100. How many units must be sold each month to break even?

User Georges Krinker
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1 Answer

3 votes

Answer:

500,000 units

Step-by-step explanation:

BEP = fixed asset / CMR

CMR = contribution / sales

contribution = 100 - (15 +35)

= $50

CMR = $50 / $100

= 0.5

BEP = $250000/ 0.5

= 500,000 units

User Fyngyrz
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5.5k points
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