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Boswell company reported the following information for the current year: Sales (50,000 units) $1,000,000, direct materials and direct labor $500,000, other variable costs $50,000, and fixed costs $360,000. What is Boswell's break-even point in units?

Respuesta :

Answer:

Break even point in units = 40000 units

Explanation:

Break even point in units is the point where there is no profit or no loss and the sales revenue equals the total cost. The break even in units formula gives us the number of units required to rbreak even.

The formula for breakeven in units is,

Break even in units = Fixed costs / Contribution per unit

Where,

Contribution per unit = Sellin price per unit - Variable cost per unit

The selling price per unit here is = 1000000/50000 = $20

The variable costs per unit = (500000+50000) / 50000 = $11

Contribution per unit = 20-11 = $9 per unit

The break even in  Units = 360000 / 9 = 40000 units

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