Answer:
The options are given below:
A. 600 units
B. 450 units
C. 550 units
D. 650 units
E. 500 units
The correct option is A.
Explanation:
The breakeven point refers to the level of production at which the costs of production will be equal to the revenues for a product.
In the question above, we are given:
Fixed costs = $15,000
Variable costs = $100 per unit
Price of one unit after production = $125
The formula for calculating the breakeven is given as:
Breakeven = [tex]\frac{fixed costs}{revenue per unit - variable costs per unit}[/tex]
we have:
Breakeven = [tex]\frac{15,000}{125 - 100}[/tex]
Breakeven = [tex]\frac{15,000}{25}[/tex]
Breakeven = 600 units.
Answer:
$75,000
Explanation:
The BEP which is the break even point is the point where the company's sales or revenue generated is equal to the cost incurred. As such, the BEP is the number of units that must be sold for the company to make neither a profit nor a loss.
Both sales and variable cost are dependent on the number of units sold.
The sales less the variable cost gives the contribution margin. The contribution margin less the fixed cost gives the net operating income.
Let the number of units that must be sold to break even be y
125y - 100y - 15,000 = 0
25y = 15,000
y = 15000/25
y = 600
The sales amount to breakeven
= 600 * $125
= $75,000
