Final answer:
The break-even point for Carla Vista Company is 175,000 units or $1,400,000 in dollars, calculated using the formulas for break-even point in units and dollars based on the provided fixed costs, variable costs percentage, and selling price per unit.
Step-by-step explanation:
To compute the break-even point in units, we need to use the formula:
Break-even point (units) = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit)
The fixed costs have been provided as $560,000. The selling price per unit is $8, and the variable costs are 60% of the sales, which means the variable cost per unit is 60% of $8, resulting in $4.80 per unit.
Break-even point (units) = $560,000 / ($8.00 - $4.80) = $560,000 / $3.20 = 175,000 units
To compute the break-even point in dollars:
Break-even point (dollars) = Break-even point (units) × Selling Price per Unit
Break-even point (dollars) = 175,000 units × $8 = $1,400,000
The break-even point is therefore 175,000 units or $1,400,000 in dollars.