Hilton Enterprises sells a product for $104 per unit. The variable cost is $69 per unit, while fixed costs are $257,250.
Determine (a) the break-even point in sales units and (b) the break-even point if the selling price were increased to $111 per unit.
| a. Break-even point in sales units | units |
| b. Break-even point if the selling price were increased to $111 per unit | units |
| a Break even point in sales unit | = | Fixed cost/Contribution per unit | |
| = | where contribution per unit = Sales per unit less Variable cost per unit | ||
| = | =257250/35 | ||
| = | 7350 | ||
| working note-1, Calculation of Contribution per unit | |||
| Sales per unit | $104.00 | ||
| Less: Variable cost per unit | $69.00 | ||
| contribtion per unit | $35.00 | ||
| b Break even point if selling price increased to $111 | = | Fixed cost/Contribution per unit | |
| = | where contribution per unit = Sales per unit less Variable cost per unit | ||
| = | =257250/42 | ||
| = | 6125 | ||
| working note-1, Calculation of Contribution per unit | |||
| Sales per unit | = | $111.00 | |
| Less: Variable cost per unit | = | $69.00 | |
| contribtion per unit | = | $42.00 | |
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