Question

Khayyam Company, which sells tents, has provided the following information: Unit Sale price is $45; Unit variable cost is $11; Total fixed costs are $12,700. What are the required sales in units for Khayyam to break even? (Round your answer up to the nearest whole unit.)

Answer 1

Break even units of sales is 374 units.

Step-by-step explanation:

The break even point in units is the number of units that the firm needs to sold to cover its total costs and break even. It is a point where total revenue is equal to total cost and there is no profit and no loss. The break even point in units is calculated using the following formula,

Break even in unit = Fixed costs / Contribution margin per unit

Contribution margin per unit = Selling price per unit - Variable cost per unit

Contribution margin per unit = 45 - 11 = $34

Break even in units = 12700 / 34 = 373.529 units rounded off to 374 units