Question

Given the following data: Selling price per unit $ 2.00 Variable production cost per unit $ 0.30 Fixed production cost $ 3,000 Sales commission per unit $ 0.20 Fixed selling expenses $ 1,500 The break-even point in dollars is:

Answer 1

Break-even point (dollars)= $6,000

Step-by-step explanation:

Giving the following information:

Selling price per unit $ 2.00

Variable production cost per unit $ 0.30

Fixed production cost $ 3,000

Sales commission per unit $ 0.20

Fixed selling expenses $ 1,500

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

Break-even point (dollars)= fixed costs/ contribution margin ratio

Fixed costs= 3,000 + 1,500= 4,500

Unitary variable cost= 0.3 + 0.2= $0.5

Break-even point (dollars)= 4,500 / [(2 - 0.5) / 2]

Break-even point (dollars)= $6,000