Break-Even Sales
Currently, the unit selling price of a product is $230, the unit variable cost is $190, and the total fixed costs are $448,000. A proposal is being evaluated to increase the unit selling price to $260.
a. Compute the current break-even sales
(units).
units
b. Compute the anticipated break-even sales
(units), assuming that the unit selling price is increased to the
proposed $260, and all costs remain constant.
units
Break-even sales (Units) = Fixed Costs/ (Sales price per unit - Variable Costs per unit)
a. Break-even Sales (Units) = 11,200 Units
Explanation
Calculation of Break-even sales (Units)
Particulars | Amount ($) |
Fixed Costs | 448,000 |
Selling Price per unit | 230 |
Variable cost per unit | 190 |
Break-even Sales Units (448000/(230-190) | 11,200 |
b. Break-even Sales (Units), if the selling price is $ 260 per unit = 6,400 Units
Calculation of Break-even sales (Units)
Particulars | Amount ($) |
Fixed Costs | 448,000 |
Selling Price per unit | 260 |
Variable cost per unit | 190 |
Break-even Sales Units (448,000/(260-190) | 6,400 |
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