Question

Street Company's fixed expenses total $150,000, its contribution margin ratio is 40% and its selling price per unit is $11.25. Based on this information, the break-even point in units is:

Answer 1

Break-even point in units= 33,333.33 units

Step-by-step explanation:

The break-even point (BEP) is the quantity of each product to be sold such that the business makes no profit or loss.

The beak-even point can be determined as follows:

The Break-even point in sales = Total general fixed cost / Contribution per unit margin

Contribution per unit = Contribution margin ration × selling price

= 40%×11.25 =4.5

The break-even point (in unit) = 150,000/ 4.5 =33,333.33

break-even point in units= 33,333.33 units