Question

Use the following information to determine the break-even point in units (rounded to the nearest whole unit):

Unit sales: 49,000 units
Unit selling price: $15.05 per unit
Unit variable cost: $8.60 per unit
Fixed costs: $185,000
What is the break-even point in units?

(A) 18,500 units
(B) 22,200 units
(C) 25,000 units
(D) 49,000 units

Answer 1

The break-even point in units is found by dividing the company's fixed costs by the difference between the unit selling price and the unit variable cost. In this case, the break-even point is 28682 units when rounded to the nearest whole unit.

Step-by-step explanation:

To determine the break-even point in units for a company, you can use the formula:

Break-even Point (units) = Fixed Costs / (Unit Selling Price - Unit Variable Cost)

In the given scenario:

• Fixed Costs = $185,000
• Unit Selling Price = $15.05 per unit
• Unit Variable Cost = $8.60 per unit

To calculate the break-even point:

Break-even Point (units) = $185,000 / ($15.05 - $8.60)

Break-even Point (units) = $185,000 / $6.45

Break-even Point (units) = 28682.17

When rounded to the nearest whole unit, the break-even point is 28682 units.