Scrushy Company sells a product for $150 per unit. The variable cost is $110 per unit, and fixed costs are $200,000

Scrushy Company sells a product for $150 per unit. The variable cost is $110 per unit, and fixed costs are $200,000. Determine (a) the break-even point in sales units and (b) the break-even point in sales units if the company desires a target profit of $50,000.

Answer:
a. 5,000 units = $200,000 ÷ ($150 – $110)
b. 6,250 units = ($200,000 + $50,000) ÷ ($150 – $110)


Calderon Inc. sells a product for $80 per unit. The variable cost is $55 per unit, and fixed costs are $25,000. Determine (a) the break-even point in sales units and (b) the breakeven point in sales units if the company desires a target profit of $20,000.

Answer:
a. 1,000 units = $25,000 ÷ ($80 – $55)
b. 1,800 units = ($25,000 + $20,000) ÷ ($80 – $55)