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Find the break even point ? Rent is $10,000. Salaries to be paid is $50,000. Misc....

Find the break even point ?

Rent is $10,000. Salaries to be paid is $50,000. Misc. Fixed costs are $40,000.

Raw Materials are $4 per unit. Packaging is $.10 cents per unit. Direct Labor is $3.40 per unit. Sales price is $10.00 per unit.

If annual capacity was 30,000 units, how much would the sales price need to be to break even?

Solutions

Expert Solution

Calculation of break even point:
Break even point= Fixed cost/ contribution per unit
Fixed cost=10000+50000+40000=$100000
Variable cost per unit= 4+0.10+3.40=$7.50
Contribution per unit= sale price- variable cost per unit
                                            = 10-7.50=$2.50
Break even point=100000/2.5=40000 units
Break even point is 40000units
when units are 30000 then:
Contribution per unit= Fixed cost/break even point
                                           =100000/30000= $3.33
Sale price= Variable cost per unit+ contribution per unit
                   =7.50+3.33=$10.83
Sale price is $10.83

jeff jeffy answered 1 year ago
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