Question

Break-Even Calculations Compute the break-even point in units for each of the following independent situations: Unit Selling Price Unit Variable Cost Total Fixed Cost a. $10 $7 $180,000 b. 12 9 288,000 c. 5 3 108,000 a. Answer units b. Answer units c. Answer units

Answer 1

Solution a:

Contribution margin per unit = $10 - $7 = $3 per unit

Break even point in units = Total Fixed cost / Contribution margin per unit = $180,000 / $3 = 60,000 units

Solution b:

Contribution margin per unit = $12 - $9 = $3 per unit

Break even point in units = Total Fixed cost / Contribution margin per unit = $288,000 / $3 = 96,000 units

Solution c:

Contribution margin per unit = $5 - $3 = $2 per unit

Break even point in units = Total Fixed cost / Contribution margin per unit = $108,000 / $2 = 54,000 units