Question

a company's product sells at $12.04 per unit and has a $5.06 per unit variable cost. the company's total fixed costs are $97,800. the break-even point in units is:

Answer 1

To find the break-even point in units, calculate the contribution margin per unit and divide the total fixed costs by the contribution margin per unit. The break-even point in units is rounded up to 14,006.

Step-by-step explanation:

To determine the break-even point in units, we need to calculate the contribution margin per unit. The contribution margin is the selling price per unit minus the variable cost per unit. In this case, the contribution margin per unit is $12.04 - $5.06 = $6.98.

The break-even point can be calculated by dividing the total fixed costs by the contribution margin per unit. In this case, the break-even point in units is $97,800 / $6.98 = 14,005.72. Since it's not possible to sell a fraction of a unit, the break-even point is rounded up to 14,006 units.

Therefore, the break-even point in units is 14,006.

Answer 2

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.