Final answer:
The company's break-even point is approximately 14,015 units, calculated by dividing the total fixed costs by the difference between the selling price per unit and the variable cost per unit.
Step-by-step explanation:
To calculate the break-even point in units for this company, we use the formula:
Break-Even Point (units) = Total Fixed Costs ÷ (Selling Price per Unit - Variable Cost per Unit)
Given:
Selling Price per Unit = $12.04
Variable Cost per Unit = $5.06
Total Fixed Costs = $97,800
We calculate the break-even point as follows:
Break-Even Point (units) = $97,800 ÷ ($12.04 - $5.06) = $97,800 ÷ $6.98
Break-Even Point (units) = 14,015 (rounded to the nearest whole unit)
The company must sell approximately 14,015 units to cover all its costs and break even.