Sole Company manufactures running shoes The selling price is

Sole Company manufactures running shoes. The selling price is $80 per pair (unit) and variable costs are $60 per pair(unit). The sales volume of $776,000 generates $100, 750 of net income before taxes. Compute: Total fixed costs. Total variable costs. The break-even point in units.

Solution

Number of units sold = 776000/80 = 9700 units

Total cost = 776000 - 100750 = $ 675250

(b) Total variable cost = 9700 * 60 = $ 582000

(a) Total fixed cost = Total cost - Total variable cost = $ 93250

(c) If x is the break even point, then

x * 60 + 93250 = x * 80

so, x = 4662.5 or 4663 units