Question

Coronado reported the following information for the current year: Sales (57000 units) $1140000, direct materials and direct labor $570000, other variable costs $57000, and fixed costs $360000. What is Coronado’s break-even point in units?

Answer 1

Break even point in units = 40000 units

Step-by-step explanation:

The break even point in units is the number of units where the total revenue equals total cost. It is a point of no profit and no loss. The break even point in units is calculated as follows,

Break even in units = Fixed cost / Contribution margin per unit

Where, contribution margin per unit = Selling price per unit - Variable cost per unit

Contribution margin per unit = [1140000 - (570000 + 57000)] / 57000

Contribution margin per unit = $9

Break even point in units = 360000 / 9

Break even point in units = 40000 units