If fixed costs are $250,000, the unit selling price is $125, and the unit variable costs are $73, what is the break-even sales (units)?
Answer
3,425 units
2,381 units
2,000 units
4,808 units
Break-even = 250000/(125-73)
= 250000/52
= 4808 units
4808
To calculate the break-even sales in units, we need to use the formula:
Break-even sales (units) = Fixed costs / Contribution margin per unit
The contribution margin per unit can be calculated by subtracting the unit variable costs from the unit selling price:
Contribution margin per unit = Unit selling price - Unit variable costs
Using the given values:
Fixed costs = $250,000
Unit selling price = $125
Unit variable costs = $73
Contribution margin per unit = $125 - $73 = $52
Now, we can calculate the break-even sales (units):
Break-even sales (units) = $250,000 / $52
Break-even sales (units) ≈ 4,808 units
Therefore, the break-even sales (units) is 4,808 units.
To calculate the break-even sales (units), we need to determine the number of units that need to be sold in order to cover the fixed costs.
The break-even point occurs when the total revenue equals the total costs, resulting in zero profit or loss. The formula to calculate the break-even point in units is:
Break-even sales (units) = Fixed costs / Contribution margin per unit
The contribution margin per unit can be calculated by subtracting the unit variable cost from the unit selling price.
Let's calculate the break-even sales (units) using the given information:
Fixed costs = $250,000
Unit selling price = $125
Unit variable costs = $73
Contribution margin per unit = Unit selling price - Unit variable costs
= $125 - $73
= $52
Break-even sales (units) = Fixed costs / Contribution margin per unit
= $250,000 / $52
= 4,808 units
Therefore, the break-even sales is 4,808 units.
The correct answer is 4,808 units.