Question

A company manufactures and sells a product for $120 per unit. The company's fixed costs are $68,760, and its variable costs are $90 per unit. The company's break-even point in units is:

Answer 1

Company's Break-even point in units is 2,292 units.

Step-by-step explanation:

Break even point (in units) = Company Fixed Costs- Variable Costs

$68,760-30

=2292 units

Thus, break even point in units is 2,292.

Contribution margin per unit =Price Per Unit- Variable Cost Per Unit

= $120-$90

=$30 per unit

Sales revenue per unit of $120 less variable cost per unit of $90 would give contribution margin of $30 per unit. Fixed costs are given as $68,760 which is divided by contribution margin per unit of $30 which would give break even point of 2,292 units.

Answer 2

Break-even point in units= 2,292 units

Step-by-step explanation:

Giving the following information:

Selling price= $120 per unit.

The company's fixed costs are $68,760

Variable cost per unit= $90

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= 68,760/ (120 - 90)

Break-even point in units= 2,292 units