in 2002 jameson inc sold 500000 units of the one product it

in 2002, jameson, inc. sold 500,000 units of the one product it sells. Selling price per unit was $10. Fixed cost and cariable cost per unit at this level of sales was $6 and $2 respectively. Calculate the break-even point for Jameson in dollars and in units.

Solution

Total fixed costs=(500,000*6)=$3,000,000

Contribution margin=Sales-Variable costs

=(10-2)=$8 per unit

Hence breakeven point=Fixed cost/Contribution margin
=($3,000,000/8)=375000 units

=(375000*10)=$3,750,000.