Question

Rosewood Chiropractic Clinic is considering a new product whose fixed costs are $1,500. Rosewood has decided it needs to charge $25 per unit and have a variable cost of $10. What is the breakeven point in quantity and in dollars?

Answer 1

	CALCULATION OF CONTRIBUTION MARGIN PER UNIT
	PARTICULARS	AMOUNT
	Selling Price Per Unit=	$                           25
	Less: Variable Cost Per Unit	$                           10
	Contribution Margin Per Unit	$                           15
	Contribution Margin %	60%
	($ 15 / $ 25) X 100
	CALCULATION OF THE BREAK EVEN POINT IN DOLLARS
	Break Even point =      Fixed Cost / Contribution
	Break Even point =
	Fixed Cost =	$                     1,500
	Divide By	"/" By
	Contribution Margin %	60.00%
	Break Even point in Dollars	$                     2,500
	Answer = Break Even in Dollars = $ 2,500/-
	CALCULATION OF THE BREAK EVEN POINT IN UNITS
	Break Even point =      Fixed Cost / Contribution Margin Per Unit
	Break Even point =
	Fixed Cost =	$                     1,500
	Divide By	"/" By
	Contribution Margin Per unit	$                           15
	Break Even point (Rounded to nearest next unit)	100.00	Units
	Answer = Break Even in Units = 100 Units