Question

In 2016, teller company sold 3,000 units at $600 each. variable expenses were $420 per unit, and fixed expenses were $270,000. the same selling price, variable expenses, and fixed expenses are expected for 2017. what is teller’s break-even point in sales dollars for 2017?

Answer 1

To calculate the break-even point in sales dollars for Teller Company in 2017, the fixed expenses of $270,000 are divided by the contribution margin ratio of 30%, resulting in a break-even point of $900,000.

Step-by-step explanation:

To calculate Teller Company's break-even point for 2017 in sales dollars, we need to understand and apply the basic formula for break-even analysis. The break-even point (BEP) in sales dollars can be found by dividing the total fixed costs by the contribution margin ratio. The contribution margin ratio is calculated by subtracting the variable cost per unit from the selling price per unit and then dividing by the selling price per unit.

Using the data provided:

• Selling Price per Unit: $600
• Variable Expense per Unit: $420
• Fixed Expenses: $270,000

The contribution margin per unit is then calculated as:
$600 (selling price) - $420 (variable expenses) = $180.
To find the contribution margin ratio, divide $180 by the selling price:
$180 / $600 = 0.30 or 30%.

The break-even point in sales dollars is calculated by dividing the fixed expenses by the contribution margin ratio:
$270,000 / 0.30 = $900,000.

Therefore, Teller's break-even point for 2017 is $900,000 in sales dollars.

Answer 2

Assuming that you have the values for the year 2017, the break-even point would be 1500 units for the year 2017. To calculate this, we use the idea that at the breaking point, total sales is equal to the total cost or expenses made. Which would be:

selling (x) = fixed + variable (x)

x = fixed / (selling - variable)
x = 270000 / (600-420)
x = 1500 units