Question

In: Accounting

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

Solutions

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


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