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If a company has fixed costs of $10,000 and a contribution margin per unit of $5
If a company has fixed costs of $10,000 and a contribution margin per unit of $50, how many units must be sold to break even?
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If a company has fixed costs of $10,000 and a contribution margin per unit of $50, how many units must be sold to break even?
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Break-even point (units) = Fixed Costs / Contribution Margin per Unit = $10,000 / $50 = 200 units.
Questions & Step-by-step Solutions
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Q: If a company has fixed costs of $10,000 and a contribution margin per unit of $50, how many units must be sold to break even?
Solution:
Break-even point (units) = Fixed Costs / Contribution Margin per Unit = $10,000 / $50 = 200 units.
Steps: 6
Show Steps
Step 1: Identify the fixed costs. In this case, the fixed costs are $10,000.
Step 2: Identify the contribution margin per unit. Here, the contribution margin per unit is $50.
Step 3: Use the break-even formula: Break-even point (units) = Fixed Costs / Contribution Margin per Unit.
Step 4: Plug in the numbers: Break-even point (units) = $10,000 / $50.
Step 5: Calculate the result: $10,000 divided by $50 equals 200 units.
Step 6: Conclusion: The company must sell 200 units to break even.
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