Question

ZBC, Inc. sells a single product for $10 per unit. Variable costs are $5 per unit...

ZBC, Inc. sells a single product for $10 per unit. Variable costs are $5 per unit and fixed
        costs are $2,000.  

A - Calculate the break-even point in units.

B - How many units must be sold to earn $10,000 before income tax?

Business   Accounting   
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Answer #1

Ans)

Contribution margin per unit = selling price - variable cost

Contribution margin = $10-$5

Contribution margin per unit = $5

Fixed costs = $2,000

A. Break even point in units = Fixed costs/Contribution margin per unit

= $2,000/$5

Break even point in units = 400

B. Target sales = (Fixed costs+target profit) /contribution margin per unit

= ($2,000+$10,000)/$5

= $12,000/$5

= 2,400

Target sales units = 2,400 to earn $10,000 profit

If any doubts or queries please comment and clarify I'll explain asap.

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