Question

Break-even point Radison Inc. sells a product for $46 per unit. The variable cost is $30 per unit, while fixed costs are $23,552. Determine (a) the break-even point in sales units and (b) the break-even point if the selling price were increased to $53 per unit.

a. Break-even point in sales units units
b. Break-even point if the selling price were increased to $53 per unit units

Answer 1

The break-even point in sales units for Radison Inc. is 1,472 units at a selling price of $46 per unit. If the selling price is increased to $53 per unit, the break-even point becomes 1,024 units.

Step-by-step explanation:

To calculate the break-even point in sales units for Radison Inc., we use the formula:

Break-Even Point (Units) = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit)

For the initial selling price:

• Fixed Costs: $23,552
• Selling Price per Unit: $46
• Variable Cost per Unit: $30

Break-Even Point = $23,552 / ($46 - $30) = $23,552 / $16 = 1,472 units

If the selling price were increased to $53 per unit:

• Fixed Costs: $23,552
• New Selling Price per Unit: $53
• Variable Cost per Unit: $30

Break-Even Point = $23,552 / ($53 - $30) = $23,552 / $23 = 1,024 units