You have a company that has sold 500 units for $300,000. Each unit costs $200 to...

You have a company that has sold 500 units for $300,000. Each unit costs $200 to make. Each year we also have a sales commission of $40 per bike. Our fixed costs are 15,000, but I want to make a target profit of $30,000.

What is the breakeven in sales

Expert Solution

Correct Answer:

break even in sales

$ 75,000

working:

A	Sales Revenue ($ 300,000/500 Units	$ 600
	Less: Variable cost
	cost to make	$ 200
	Sales Commission	$ 40
B	Total Variable cost	$ 240
C=A-B	Contribution margin	$ 360
D =C/A *100	Contribution margin ratio	60%
E	Fixed cost	$ 15,000
F	Target profit	$ 30,000
G = (E+F)/D	break even in sales	$ 75,000

End of Answer.

Thanks

ekkarill92 answered 2 years ago

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