The following information is available for XYZ Company Sales

The following information is available for XYZ Company:

Sales (in units) ................. 5,000 units

Selling price .................... $40 per unit

Variable costs ................... $16 per unit

Fixed costs (in total) ........... $48,000

Calculate the number of units XYZ Company must sell in order to break-even.

Solution

Contribution margin=Selling price-Variable costs

(40-16)=$24 per unit

Hence breakeven units=Fixed Cost/Contribution margin

=(48000/24)

=2000 units.