84.0k views
0 votes
Break-Even Point

Sheridan Enterprises sells a product for $101 per unit. The variable cost is $51 per unit, while fixed costs are $570,000.

Determine (a) the break-even point in sales units and (b) the break-even point if the selling price were increased to $108 per unit.

a. Break-even point in sales units fill in the blank 1
units
b. Break-even point if the selling price were increased to $108 per unit fill in the blank 2
units

User Ji Yalin
by
8.6k points

1 Answer

3 votes

Answer:

Step-by-step explanation:

a. To find the break-even point in sales units, we can use the formula:

Break-even point = Fixed costs / (Selling price per unit - Variable cost per unit)

Plugging in the given values, we get:

Break-even point = $570,000 / ($101 - $51) = $570,000 / $50 = 11,400 units

Therefore, the break-even point in sales units is 11,400 units.

b. If the selling price were increased to $108 per unit, the new contribution margin per unit would be:

Contribution margin per unit = Selling price per unit - Variable cost per unit = $108 - $51 = $57

Using the same formula as above, we can find the new break-even point in sales units:

Break-even point = $570,000 / ($108 - $51) = $570,000 / $57 = 10,000 units

Therefore, the break-even point if the selling price were increased to $108 per unit is 10,000 units.

User Simon Harmel
by
7.8k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories