What is the break-even point in units if fixed costs are $100,000, variable cost per unit is $20, and selling price per unit is $50?

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Q: What is the break-even point in units if fixed costs are $100,000, variable cost per unit is $20, and selling price per unit is $50?

Solution: Break-even point (units) = Fixed Costs / (Selling Price - Variable Cost) = $100,000 / ($50 - $20) = 2,000 units.

Steps: 6

Step 1: Identify the fixed costs. In this case, fixed costs are $100,000.
Step 2: Identify the variable cost per unit. Here, the variable cost per unit is $20.
Step 3: Identify the selling price per unit. The selling price per unit is $50.
Step 4: Calculate the contribution margin per unit. This is done by subtracting the variable cost from the selling price: $50 - $20 = $30.
Step 5: Calculate the break-even point in units. This is done by dividing the fixed costs by the contribution margin: $100,000 / $30 = 3,333.33 units.
Step 6: Since we cannot sell a fraction of a unit, round up to the nearest whole number. Therefore, the break-even point is 3,334 units.