Question

A business requires to sell​ 22,000 units in order to earn a target profit of​ £150,000. The contribution per unit is​ £15.

What is the​ business's break-even​ point?

A. ​12,000 units
B. ​15,000 units
C. ​10,000 units
D. ​14,000 units

Answer 1

The business's break-even point is 10,000 units.

Step-by-step explanation:

To determine the break-even point, we can use the formula:

Break-even point = Fixed Costs / Contribution per Unit

In this case, the target profit of £150,000 is the fixed cost. The contribution per unit is £15. Substituting these values into the formula:

Break-even point = £150,000 / £15 = 10,000 units

Therefore, the business's break-even point is 10,000 units (C).