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Junior Bodway, Incorporated, has provided the following budgeted data: Sales 10,000 units Selling price $ 50 per unit Variable expense $ 30 per unit Fixed expense $ 180,000 How many units would the company have to sell in order to have a net operating income of $40,000?

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Answer:

Break-even point in units= 11,000 units

Explanation:

Giving the following information:

Selling price $ 50 per unit

Variable expense $ 30 per unit

Fixed expense $ 180,000

Desired profit= $40,000

To calculate the number of units to be sold, we need to use the break-even point formula:

Break-even point in units= (fixed costs + desired profit) / contribution margin per unit

Break-even point in units= (180,000 + 40,000) / (50 - 30)

Break-even point in units= 11,000 units

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