Question

Break-Even Point Sheridan Inc. sells a product for $66 per unit. The variable cost is $30 per unit, while fixed costs are $326,592. Determine (a) the break-even point in sales units and (b) the break-even point if the selling price were increased to $72 per unit. a. Break-even point in sales units fill in the blank 1 units b. Break-even point if the selling price were increased to $72 per unit fill in the blank 2 units

Answer 1

a.

Break even in units = 9072 units

b.

Break even in units = 7776 units

Step-by-step explanation:

a.

The break even point is a point where total revenue equals total cost. The break even point in sales units can be calculated as follows,

Break even in units = Fixed Cost / (Selling price per unit - Variable cost per unit)

Break even in units = 326592 / (66 - 30)

Break even in units = 9072 units

b.

If the selling price increases, the new break even point will be,

Break even in units = 326592 / (72 - 30)

Break even in units = 7776 units