Question

Break-Even Point Radison Enterprises sells a product for $103 per unit. The variable cost is $70 per unit, while fixed costs are $217,800. Determine (a) the break-even point in sales units and (b) the break-even point if the selling price were increased to $110 per unit. a. Break-even point in sales units units b. Break-even point if the selling price were increased to $110 per unit units

Answer 1

Instructions are below.

Step-by-step explanation:

Giving the following information:

Break-Even Point Radison Enterprises sells a product for $103 per unit. The variable cost is $70 per unit, while fixed costs are $217,800.

To calculate the break-even point both in dollars and units, we need to use the following formulas:

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 217,800/ (103 - 70)

Break-even point in units= 6,600 units

Break-even point (dollars)= fixed costs/ contribution margin ratio

Break-even point (dollars)= 217,800/ (33/103)

Break-even point (dollars)= $679,800

Now, the selling price is $110:

Break-even point in units= 217,800/(110-70)= 5,445 units

Break-even point (dollars)= 217,800/ (40/110)= $598,950