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Wang Co. manufactures and sells a single product that sells for $450 per unit; variable costs are $270. Annual fixed costs are $800,000. Current sales volume is $4,200,000. Compute the break-even point in units. a. 5,500. b. 1,933. c. 4,444 d. 2,900. e. 1,160.

Respuesta :

letmeanswer

Given:

Selling price = $450

Variable cost = $270

Fixed costs = $8000000

Sales volume = $4200000

To find:

Break-even point in units

Solution:

Break even point is the point at which the total costs and sales are equal that is, revenue and expenses are equal. The formula to calculate the break-even point is as follows,

[tex]\text{Break Even Point (in units) }=\frac{\text { Fixed costs }}{\text { Selling price - variable costs }}[/tex]

On plugging-in the values we get,

Break even point = [tex]\frac{8000000}{450-270}\rightarrow\frac{8000000}{180}\rightarrow44444.44[/tex]

Therefore, the break even point for the given values is 44444.44 units.