If total fixed costs is $100,000, contribution per unit is $25 and the contribution margin ratio...

If total fixed costs is $100,000, contribution per unit is $25 and the contribution margin ratio is 40% and the company desired target profit of $25,000, what are the values of the followings (see page 97):

a) Break-Even-Point in unit = _________________?

b) Break-Even-Point in sales dollars________________________?

Solutions

Expert Solution

a) Break-even point in units = Fixed costs / Contribution margin per unit

= $100,000 / $25

= 4,000 units

b) Break-even point in sales dollars = Fixed costs / Contribution margin ratio

= $100,000 / 40%

= $250,000

ekkarill92 answered 1 year ago

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