Question

If fixed costs are $271,000, the unit selling price is $120, and the unit variable costs are $80, what is the break-even point in sales units

Answer 1

The break-even point in sales units, given fixed costs of $271,000, a selling price of $120 per unit, and variable costs of $80 per unit, is 6,775 units.

Step-by-step explanation:

To calculate the break-even point in sales units, you need to know the fixed costs, the unit selling price, and the unit variable costs. The break-even point is the number of units that must be sold for total revenue to equal total costs (both fixed and variable costs). Here, we have fixed costs of $271,000, a unit selling price of $120, and unit variable costs of $80.

The formula to calculate the break-even point in units is:

Break-Even Point (units) = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit)

Plugging in the given values:

Break-Even Point (units) = $271,000 / ($120 - $80) = $271,000 / $40 = 6,775 units

Therefore, the company must sell 6,775 units to break even.