Question

Bigelow Inc. sells a product for $800 per unit. The variable cost is $600 per unit, while fixed costs are $1,200,000. Determine (a) the break-even point in sales units and (b) the break-even point if the selling price were increased to $850 per unit.

Answer 1

Results are below.

Step-by-step explanation:

Giving the following information:

Bigelow Inc. sells a product for $800 per unit. The variable cost is $600 per unit, while fixed costs are $1,200,000.

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

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

Break-even point in units= 1,200,000 / (800 - 600)

Break-even point in units= 6,000 units

Now, the selling price= 850

Break-even point in units= 1,200,000 / 250

Break-even point in units= 4,800 units