Question

Break-Even Point

Nicolas Inc. sells a product for $59 per unit. The variable cost is $30 per unit, while fixed costs are $171,564.
Determine (a) the break-even point in sales units and (b) the break-even point if the selling price were increased to $64
per unit.
a. Break-even point in sales units
units
b. Break-even point if the selling price were increased to $64 per unit
units

Answer 1

The right answer is:

(a) 5916 units

(b) 5046 units

Step-by-step explanation:

Given:

Sales,

= $59

Variable cost,

= $30

Fixed cost,

= $171,564

Increased sale,

= $64

Now,

(a)

Contribution margin will be:

=
`Sales - Variable \ cost`

=
`59-30`

=
`29 \ per \ unit` ($)

hence,

Breakeven will be:

=
`(Fixed \ cost)/(Contribution \ margin)`

=
`(171564)/(29)`

=
`5916 \ units`

(b)

Contribution margin will be:

=
`Sales-Variable \ cost`

=
`64-30`

=
`34 \ per \ unit` ($)

hence,

Breakeven will be:

=
`(Fixed \ cost)/(Contribution \ margin)`

=
`(171564)/(34)`

=
`5046 \ units`