Question

A company sells calculators for $117. Variable costs associated with this product are $40 per unit and fixed costs associated with this product are $59,000. Total sales in the year just ended were 3,000 units.

What is the break-even point?

Select one:

a. 766 units

b. 1475 units

c. 1266 units

d. 504 units

Answer 1

Answer : a. 766 units

Computation:

Selling Price = $117 per unit

Variable cost = $40 per unit

Fixed cost = $59,000

Step 1: Calculation of contribution per unit

Contribution per unit = Selling Price - Variable cost per unit

Contribution per unit = $117 per unit - $40 per unit = $77 per unit

Step 2 : Break even point

Break even point = Fixed cost / Contribution per unit

Break Even Point = $59,000 / $77 per unit = 766.23 Units

Break Even Point ≈ 766 units

All the best...