A company manufactures and sells a product for $150 per unit. The company's fixed costs are $68,200, and its variable costs are $95 per unit. The company's break-even point in units is:
a) 1,364 units
b) 455 units
c) 718 units
d) 1,240 units
e) 1,137
The Solution
Selling price per unit (SP) 150.00
Variable costs per unit (VC) 95.00
Contribution per unit (SP-VC)(150-95) 55.00
Fixed Costs(FC) 68,200.00
Break even Point I Units (FC/ Contribution per Unit)(68,200/55) 1,240.00
Thus break even point is 1240
Units. Company will earn no profit or no loss at 1240 Units