Question

"JVL Enterprises has set a target profit of $126,000. The company sells a single product for $50 per unit. Variable costs are $15 per unit and fixed costs total $98,000. How many units does JVL have to sell to BREAK EVEN?

A.1,960
B.3,600
C.2,800
D.6,400"

Answer 1

JVL Enterprises needs to sell 2,800 units to break even. This is found by dividing the fixed costs by the price per unit minus the variable cost per unit.

Step-by-step explanation:

Break-even Analysis

To calculate the break-even point for JVL Enterprises, we need to consider both the fixed costs and the variable costs per unit, in addition to the selling price per unit. The break-even point is where total costs equal total revenue, and no profit or loss is made.

The formula to calculate the break-even point in units is: Break-even point = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit).

Using the information provided:

• Fixed Costs = $98,000
• Selling Price per Unit = $50
• Variable Cost per Unit = $15

Break-even point = $98,000 / ($50 - $15) = $98,000 / $35 = 2,800 units.

Therefore, JVL Enterprises needs to sell 2,800 units to break even.