Final answer:
To find the break-even point in units, divide the fixed costs by the contribution margin per unit. To find the break-even point in sales revenue, multiply the break-even point (in units) by the sales price per unit. In this case, the break-even point is approximately 15,269 units or $916,140 in sales revenue.
Step-by-step explanation:
To find the break-even point in units, you need to determine the sales volume at which the revenue covers all the costs, resulting in zero operating income. In this case, the break-even point in units is the quantity at which the contribution margin equals the fixed costs. First, calculate the contribution margin per unit by subtracting the variable costs from the sales:
Contribution margin per unit = Sales - Variable costs per unit
Next, divide the fixed costs by the contribution margin per unit to find the break-even point:
Break-even point (in units) = Fixed costs / Contribution margin per unit
To find the break-even point in sales revenue, multiply the break-even point (in units) by the sales price per unit:
Break-even point (in sales revenue) = Break-even point (in units) * Sales price per unit
In the given income statement, the contribution margin is $409,200, and the fixed costs are $284,200. Using these values, we can calculate the break-even point:
Contribution margin per unit = $409,200 / 22,000 = $18.60/unit
Break-even point (in units) = $284,200 / $18.60 ≈ 15,269 units
Break-even point (in sales revenue) = 15,269 units * $60 ≈ $916,140