Question

Flitwick Company charges a selling price of $50 per unit for its single product, incurs variable costs of $30 per unit, and total fixed costs of $400,000. What unit sales volume is necessary to earn a net income before tax of $65,000

Answer 1

Break-even point in units= 23,250

Step-by-step explanation:

Giving the following information:

Selling price of $50

Variable costs of $30 per unit

Total fixed costs of $400,000.

Desired income= $65,000

To calculate the number of units to be sold, we need to use the following formula:

Break-even point in units= (fixed costs + desired profit) / contribution margin per unit

Break-even point in units= (400,000 + 65,000) / (50 - 30)

Break-even point in units= 23,250