Homework SourseA company budgets the following Per Unit Selling Price 15 V
A company budgets the following:
Per Unit
Selling Price. $ 15
Variable Price. 5
Fixed Costs. 4
(volume = 100,000units)
What is the breakeven point?
A. 26,667 units
B. 36,364 units
C. 40,000 units
D. 66,667 units
Solution
The correct option is therefore (c) , 40,000 units.
| Sales (100,000 *15) | 1500000 |
| Less : Variable Cost (100,000*5) | 500000 |
| Contribution (Sales - Variable Cost) | 1000000 |
| Less: Fixed Costs ( 100,000*4) | 400000 |
| Net Profit | 600000 |
| Contribution per unit ( 1,000,000/100,000) | 10 |
| Fixed Costs | 400000 |
| Break even point in units ( Fixed Costs/ Contribution per unit) | 40000 |
