Question

Davison Toaster Corp. sells its products for $250 per unit. It has the following costs:

Rent $109,900
Factory labor $29 per unit
Executive salaries $290,000
Raw materials $6 per unit
The break-even point is:____.
a. more than 1,210 units
b. 1,568 units.
c. 1,210 units.

Answer 1

Break-even point in units= 1,860

Step-by-step explanation:

Giving the following information:

Selling price= $250 per uni

Fixed costs= 109,900 + 290,000= $399,900

Unitary variable cost= 29 + 6= $35

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= 399,900 / (250 - 35)

Break-even point in units= 1,860