Question

# Break-Even Point Nicolas Inc. sells a product for \$62 per unit. The variable cost is \$38...

Break-Even Point

Nicolas Inc. sells a product for \$62 per unit. The variable cost is \$38 per unit, while fixed costs are \$69,120.

Determine (a) the break-even point in sales units and (b) the break-even point if the selling price were increased to \$68 per unit.

 a. Break-even point in sales units units b. Break-even point if the selling price were increased to \$68 per unit units

a. Break-even point in sales units

Contribution per unit = Selling price – Variable cost per unit

= \$62 - \$38

= \$24 per unit

Break-even point in unit sales = Fixed costs / Contribution per unit

= \$69,120 / \$24 per unit

= \$2,880 units

b. Break-even point if the selling price were increased to \$68 per unit

Contribution per unit = Selling price – Variable cost per unit

= \$68 - \$38

= \$30 per unit

Break-even point in unit sales = Fixed costs / Contribution per unit

= \$69,120 / \$30 per unit

= \$2,304 units

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