Question

Gerald Enterprise provides the following information about its single product, for each month: Estimated Sales Units 3,500 units Selling price per unit $150 Variable cost per unit $90 Total fixed expense $24,000 What is the breakeven point in units?

Answer 1

To calculate the breakeven point in units for Gerald Enterprise's product, subtract the variable cost per unit from the selling price per unit to get the contribution margin per unit, then divide the total fixed expenses by the contribution margin per unit. The breakeven point is 400 units.

Step-by-step explanation:

The question asks for the calculation of the breakeven point in units for Gerald Enterprise's single product. To calculate the breakeven point, we need to divide the total fixed expenses by the contribution margin per unit. The contribution margin per unit is the difference between the selling price per unit and the variable cost per unit.

Given:

• Selling price per unit = $150
• Variable cost per unit = $90
• Total fixed expense = $24,000

First, calculate the contribution margin per unit:

Contribution margin per unit = Selling price per unit – Variable cost per unit

Contribution margin per unit = $150 – $90 = $60

Then, calculate the breakeven point in units:

Breakeven point in units = Total fixed expenses ⁄ Contribution margin per unit

Breakeven point in units = $24,000 ⁄ $60 = 400 units

Therefore, the breakeven point for Gerald Enterprise is 400 units.