Question

Emma owns an Internet business where she sells weatherproof car floor mats. Her monthly fixed costs are $50,000. The average price per unit is $25 and the average variable cost per unit is $15. What is her break-even point?

Answer 1

Break even in units is 5000 units per month.

Step-by-step explanation:

Breakeven in units is the point or number of units that yield no profit or no loss and the total revenue at this point equals total cost.

The formula for break even in units is:

The break even in units = Fixed cost / Contribution per unit

Where the contribution per unit = Selling price per unit - Variable cost per unit

So, for Emma, the break even in units is:

Contribution per unit = 25 - 15 = 10

Break even in units = 50000 / 10 = 5000 units per month