Question
In: Finance
Martin Corp. currently sells 180,000 units per year at a price of $7.00 per unit; its...
- Martin Corp. currently sells 180,000 units per year at a price of $7.00 per unit; its variable cost is $4.20 per unit; and fixed costs are $400,000. What is Martin’s operating breakeven point in both a) units and b) dollars (6 points).
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Expert Solution
Answer:-
Part (a):- Operating Break even point (in units) = Fixed Costs / (Selling price - variable cost)
= $400,000/ ( $7 - $4.20)
= $400,000 / $2.80
= 142857.1429 units
Part (b):- Operating Break even point (in dollars) = Break even points in units x Price per unit
= 142857.1429 units x $7/unit
= $1,000,000
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