The break-even point for Shock Electronics is 7,500 units.
The formula for break-even point in units is: Break-even Point (in units) = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit)
Given data:
- Fixed Costs = $97,500
- Selling Price per Unit = $35
- Variable Cost per Unit = $22
Break-even Point = 97,500 / (35 - 22)
= 97,500 / 13
= 7500 units.
So, this means they need to sell 7,500 units to cover their fixed costs and start making a profit.
Full question:
Shock Electronics sells portable heaters for $35 per unit, and the variable cost to produce them is $22. Mr. Amps estimates that the fixed costs are $97,500. Compute the break-even point in unit