Question

A manager has determined that a potential new product can be sold at a price of $33.50 each. The cost to produce the product is $26.00, but the equipment necessary for production must be leased for $160,000 per year. What is the break-even point

Answer 1

the break-even point in units is 21,333 units

Step-by-step explanation:

The computation of the break even point in units is shown below:

Break even point in units is

= Fixed cost ÷ contribution margin per unit)

= $160,000 ÷ ($33.50 - $26)

= $160,000 ÷ $7.5

= 21,333 units

Hence, the break-even point in units is 21,333 units

And, the same is to be considered

We simply applied the above formula so that the correct units could come