Question

Current Attempt in Progress Sheridan Company has a unit selling price of $700, variable costs per unit of $400, and fixed costs of $302,700. Compute the break-even point in units using (a) the mathematical equation and (b) unit contribution margin. (a) Mathematical Equation (b) Unit contribution margin Break-even point units units

Answer 1

1009 units

Step-by-step explanation:

a) Using mathematical equation:

Net profit = Sales - Variable cost - Fixed cost

To break even, NP = 0 and assume number of units sold is a

0 = 700 x a - 400 x a - 302700

--> a = 1009 units (Number of units to break-even)

b) Using unit contribution margin method

UCM = Unit selling price - Unit variable cost = 700 - 400 = 300

Break even point (units) = Fixed cost / UCM = 302700 / 300 = 1009 units