Kendo Ltd has fixed costs of 149000 and variable costs are 7

Kendo Ltd has fixed costs of $149,000 and variable costs are 75% of the selling price. To realise profits of $741,000 from sales of 35,600 units, what must the selling price be per unit?

Solution

Let the Selling price per Unit = x Contribution per Unit = Sales - Variable Costs Contribution per Unit = x - 1.75 x Contribution per Unit = 0.25x BEP (in Units) = (Fixed Cost + Profit) / Contribution per Unit BEP (in Units) = ($149,000 + $741,000) / 0.25x or say, 35,600 Units = $890,000 / 0.25 x 8,900x = $890,000 x = $890,000 / 8,900 x = $100 per Unit = Selling Price per Unit