Fill in the Blank QuestionFill in the blank question.A company has fixed costs of $50,000 while manufacturing a product that has variable costs of $4 per unit and sells for $14 per unit. The break-even point is units.
Question
Fill in the Blank QuestionFill in the blank question.A company has fixed costs of 4 per unit and sells for $14 per unit. The break-even point is units.
Solution
The break-even point is calculated by dividing the fixed costs by the difference between the selling price per unit and the variable cost per unit.
Here's the step-by-step calculation:
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Identify the fixed costs, variable costs per unit, and selling price per unit. In this case, the fixed costs are 4, and the selling price per unit is $14.
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Calculate the difference between the selling price per unit and the variable cost per unit. This is also known as the contribution margin per unit. In this case, the contribution margin per unit is 4 = $10.
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Divide the fixed costs by the contribution margin per unit to find the break-even point. In this case, the break-even point is 10 = 5,000 units.
So, the company needs to sell 5,000 units to break even.
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