Question

DEF sells its shirts for $50 a piece. If fixed costs are $300,000 and variable costs...

DEF sells its shirts for $50 a piece. If fixed costs are $300,000 and variable costs are $20 per unit, what is the break even in units?
A-600,000
B-15,000
C-10,000
D-3750
Business   Accounting   
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Answer #1

C-10,000

Break even in units = Fixed Costs/Contribution Margin per unit
= $ 3,00,000 / $       30
= 10,000
Working:
Contribution Margin per unit = Sales -Variable Costs
= 50-20
= $       30

Break even is the level at which there is no profit and no loss.It means revenues is equla to all costs.After that point variable costs are the only costs and nothing else.

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