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The company has annual fixed costs of $200,032. How many units must the company sell in...

The company has annual fixed costs of $200,032. How many units must the company sell in order to break even each year. a given product has the following variable costs per unit: a. direct materials $100 b. Direct labor $50 c. variable selling costs $10 d. variable administrative costs $2 The units sell for $200 each.

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Answer #1

Total annual fixed costs = $200,032

Variable direct materials cost per unit = $100

Variable direct labor cost per unit = $50

Variable selling costs per unit = $10

Variable administrative costs per unit = $2

Total variable cost per unit = 100 + 50 + 10 + 2 = $162

Selling price of each unit = $200

Break-even point = Total annual fixed costs / (Selling price of each unit - Total variable cost of each unit)

= 200032 / (200 - 162)

= 5264 units

Hence the break-even point is 5264 units.

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