Question

Calculate the break-even point in units and dollars (chapter 4, text) Plot a Break-Even Chart Total Per Unit Percentage Sales (1000 units) $50,000 $50 100% Less: Variable costs 20,000 20 40% Contribution Margin 30,000 30 60% Less: Fixed costs 25,000 Net Income 5,000

Answer 1

Answer: Break even point in units = 833.33 while break even point in dollar = $41,666.67

Step-by-step explanation: Break even point is the point where the sales of a company are enough to cover the expenses of the business. It is the point where there is neither profit or loss in a company.

Break-Even Point in Units = Fixed Costs / (Sales Price Per Unit - Variable Costs)

Where contribution margin is sales price per unit less variable costs per unit.

= $25000/$30 = 833.33

Break-Even Point in $ = Sales Price Per Unit x Break-Even Point in Units.

= $50 × 833.33

= $41,666.67

Answer 2

Break even point in dollars = Fixed cost / Contribution margin = 25,000 / 60% = $ 41,667

Break even point in units = Break even point in dollar / Sale price per unit = 41,667 / 50 = 833.33 (it can be rounded up to 834 or down to 833 units, both the answers should be correct)