Question

Paney Company makes calendars. Information on cost per unit is as follows: Direct materials: $1.50 Direct labor: $1.20 Variable overhead: $0.90 Variable marketing expense: $0.40 Fixed marketing expense totaled $13,000 and fixed administrative expense totaled $35,000. The price per calendar is $10. What is the break-even point in units?

Answer 1

Break-even point in units= 8,000 units

Step-by-step explanation:

Giving the following information:

Variable costs:

Direct materials $1.50

Direct labor 1.20

Variable overhead 0.90

Variable marketing expense 0.40

Total variable costs= 4

Fixed costs:

The fixed marketing expense totaled $13,000

The fixed administrative expense totaled $35,000.

Total fixed costs= $48,000

The price per calendar is $10.

To calculate the break-even point in dollars, we need to use the following formula:

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

Break-even point in units= 48,000/ (10 - 4)

Break-even point in units= 8,000 units