Question

If the sales price is $150 per unit, the variable cost is $90 per unit, and total fixed costs is $24,000, the breakeven in sales dollars is:

a) $24,000.
b) $60,000
c) $36,000.
d) $15,000.

Answer 1

The breakeven point in sales dollars is $60,000, which is calculated by dividing the total fixed costs by the contribution margin per unit and then multiplying that result by the sales price per unit.

Step-by-step explanation:

The breakeven point in sales dollars for a company is calculated by dividing the total fixed costs by the contribution margin per unit (sales price per unit minus variable cost per unit). For a given sales price of $150 per unit, a variable cost of $90 per unit, and total fixed costs of $24,000, the contribution margin per unit is $150 - $90 = $60. To find the breakeven point in sales dollars, we divide the total fixed costs by the contribution margin per unit:

$24,000 ÷ $60 = 400 units.

To convert this result to sales dollars, we multiply the number of units by the sales price per unit:

400 units x $150 = $60,000.

Therefore, the breakeven in sales dollars is $60,000, not $15,000 as was mentioned in the query.