To calculate the break-even point for Dirac Manufacturers Co., we need to use the following information:
Selling price per unit: $57.00
Variable cost per unit: $18.00
Fixed costs: $7800.00
Capacity per period: 500 units
Calculate the break-even point in units:
The break-even point is the number of units that the company needs to sell to cover its fixed and variable costs. We can calculate the break-even point in units using the formula:
Break-even point (units) = Fixed costs / (Selling price per unit - Variable cost per unit)
Substituting the given values, we get:
Break-even point (units) = $7800 / ($57 - $18) = 200 units
Therefore, the break-even point in units is 200 units.
Calculate the break-even point to the nearest dollar:
To calculate the break-even point to the nearest dollar, we need to multiply the break-even point in units by the selling price per unit. Therefore, the break-even point to the nearest dollar is:
Break-even point (dollars) = Break-even point (units) x Selling price per unit
= 200 x $57
= $11,400
Therefore, the break-even point to the nearest dollar is $11,400.
Calculate the break-even point as a percentage of capacity:
To calculate the break-even point as a percentage of capacity, we need to divide the break-even point in units by the capacity per period and multiply by 100. Therefore, the break-even point as a percentage of capacity is:
Break-even point (percentage of capacity) = (Break-even point (units) / Capacity per period) x 100
= (200 / 500) x 100
= 40%
Therefore, the break-even point as a percentage of capacity is 40%.