Question

Gladstorm Enterprises sells a product for $50 per unit. The variable cost is $35 per unit, while fixed costs are $15,540. Determine the break-even point in sales units. Round answer to the nearest whole number. units Determine the break-even point in sales units if the selling price was increased to $63 per unit. Round answer to the nearest whole number.

Answer 1

$34,965

Step-by-step explanation:

The BEP which is the break even point is the point where the company's sales or revenue generated is equal to the cost incurred. As such, the BEP is the number of units that must be sold for the company to make neither a profit nor a loss.

Both sales and variable cost are dependent on the number of units sold.

The sales less the variable cost gives the contribution margin. The contribution margin less the fixed cost gives the net operating income.

Let the breakeven point inunits be f

63f = 15,540 + 35f

63f - 35f = 15,540

28f = 15540

f = 555 units

The break even point in sale units

= 555 * $63

= $34,965