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​Richard's Framing Company provides the following information about its single product. Targeted operating income $58,000 Selling...

​Richard's Framing Company provides the following information about its single product.

Targeted operating income

$58,000

Selling price per unit

$200

Variable cost per unit

$40

Total fixed cost

$344,000

What is the breakeven point in​ units?

A.363

B.1,433

C.2,150

D.242

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Answer #1

Note that Breakeven point is the point where by selling breakeven number of units company neither earns profit nor incur loss after deducting fixed cost I e. its contribution is exactly equal to cover fixed cost.

Breakeve .point (in units) = Fixed cost / contribution per unit

In the present case fixed cost = $344000

Contribution = sale price -. Variable cost

= 200-40

Therefore, contribution = $160

Breakeven point (in units) = $344000/$160

= 2150 units

Therefore correct answer is (c) 2150 units.

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