Elrod Inc. sells a product for $75 per unit. The variable cost is $45 per unit, while fixed costs are $48,000. Determine (a) the break-even point in sales units and (b) the breakeven point if the selling price were increased to $95 per unit.
Answer:
a. 1,600 units = $48,000 ÷ ($75 – $45)
b. 960 units = $48,000 ÷ ($95 – $45)
Recovery Enterprises sells a product for $90 per unit. The variable cost is $60 per unit, while fixed costs are $45,000. Determine (a) the break-even point in sales units and (b) the break-even point if the selling price were increased to $110 per unit.
Answer:
a. 1,500 units = $45,000 ÷ ($90 – $60)
b. 900 units = $45,000 ÷ ($110 – $60)
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