Question

in g Boren Company reported the following information for the current year: Sales (625 units) $37,800, direct materials and direct labor $14,600, other variable costs $13,200, and fixed costs $6,000. What is the company's break-even point in units?

Answer 1

Break even in units = 375 units

Step-by-step explanation:

Break even point in units is the point where the total revenue earned equals total cost. It is a point of no profit no loss. Break even point in units is calculated as follows,

Break even in units = fixed cost / contribution margin per unit

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

First we need to calculate the Contribution margin per unit.

Contribution margin per unit = [37800 - (14600 + 13200)] / 625

Contribution margin per unit = 16

Break even in units = 6000 / 16

Break even in units = 375 units

Answer 2

375

Step-by-step explanation:

Breakeven point is the number of units produced and sold at which net income is equal to zero. It is the point at which revenue is equal to cost.

Break even point = F / (P - V)

F = fixed cost = $6,000

P = price = $37,800 / 625 = $60.48

V = variable cost per unit = ($14,600 + $13,200) / 625 = $44.48

$6,000 / $60.48 - $44.48 = 375

I hope my answer helps you