Question

Daimler Inc. sells a product for $75 per unit. The variable cost is $50 per unit, while fixed costs are $5,400,000.

Determine (a) the break-even point in sales units and (b) the break-even point if the selling price were increased to $80 per unit.
a. Break-even point in sales units ______ units
b. Break-even point if the selling price were increased to $80 per unit ______ units
b. Break-even point if the selling price were increased to $80 per unit fill in the blank 2 of 2 units

Answer 1

To calculate the break-even point for Daimler Inc. at a $75 selling price, divide the fixed costs by the contribution margin ($25), resulting in 216,000 units. For an $80 selling price, the contribution margin is $30, leading to a break-even point of 180,000 units.

Step-by-step explanation:

Calculating Break-Even Points

To calculate the break-even point in sales units for Daimler Inc., you subtract the variable cost from the selling price and divide the fixed costs by this margin. The formula you use is:

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

For an initial selling price of $75, it is:

Break-Even Point (units) = $5,400,000 ÷ ($75 - $50) = $5,400,000 ÷ $25 = 216,000 units

For a new selling price of $80, the break-even point is:

Break-Even Point (units) = $5,400,000 ÷ ($80 - $50) = $5,400,000 ÷ $30 = 180,000 units

So, the answers are: (a) 216,000 units and (b) 180,000 units.

Answer 2

The break-even point for Daimler Inc. is 216,000 units with a selling price of $75 per unit. If the selling price increases to $80 per unit, the break-even point decreases to 180,000 units.

Step-by-step explanation:

Break-Even Analysis

The break-even point in sales units can be calculated by dividing the fixed costs by the contribution margin per unit, which is the selling price minus the variable cost per unit. For Daimler Inc., with a selling price of $75 per unit, variable costs of $50 per unit, and fixed costs of $5,400,000, the break-even point in units would be calculated as follows:

1. Contribution Margin per Unit = $75 - $50 = $25
2. Break-Even Point in Units = $5,400,000 / $25 = 216,000 units

When the selling price is increased to $80 per unit, the new contribution margin per unit is $80 - $50 = $30. The new break-even point in units is then $5,400,000 / $30 = 180,000 units.

Answer

a. Break-even point in sales units = 216,000 units

b. Break-even point if the selling price were increased to $80 per unit = 180,000 units