Question

Dilts Company has a unit selling price of $400, unit variable costs of $250, and fixed costs of $210,000. Compute the break-even point in units using (a) the mathematical equation and (b) unit contribution margin.

Answer 1

(a) Break-even point in units using the mathematical equation = 1,400 units

(b) Break-even point in units using unit contribution margin = 1,400 units

Step-by-step explanation:

(a) Break-even point in units using the mathematical equation

Break-even point in units using the mathematical equation = Fixed costs / (Unit selling price - Unit variable costs) …………….. (1)

Substituting the relevant values into equation (1), we have:

Break-even point in units using the mathematical equation = $210,000 / ($400 - $250) = 1,400 units

(b) Break-even point in units using unit contribution margin

Unit contribution margin = Unit selling price - Unit variable costs = $400 - $250 = $150

Therefore, we have:

Break-even point in units using unit contribution margin = Fixed costs / Unit contribution margin = = $210,000 / $50 = 1,400 units