Question

arget Profit Scrushy Company sells a product for $150 per unit. The variable cost is $110 per unit, and fixed costs are $200,000. Determine (a) the break-even point in sales units and (b) the break-even point in sales units if the company desires a target profit of $50,000. a. Break-even point in sales units fill in the blank 1 units b. Break-even point in sales units if the company desires a target profit of $50,000 fill in the blank 2 units

Answer 1

Results are below.

Step-by-step explanation:

Giving the following information:

Selling price per unit= $150

The variable cost is $110 per unit, and fixed costs are $200,000.

To calculate the break-even point in units, we need to use the following formula:

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 200,000 / (150 - 110)

Break-even point in units= 5,000 units

Now, the desired profit is $50,000:

Break-even point in units= (fixed costs + desired profit) / contribution margin per unit

Break-even point in units= (200,000 + 50,000) / 40

Break-even point in units= 6,250