A company manufactures a product and sells it for $120 per unit. The total fixed costs of manufacturing and selling the product are expected to be $155,250, and the variable costs are expected to be $75 per unit. What is the company's break-even point in (a) units and (b) dollar sales?
What will be an ideal response?
Contribution margin = $120 - $75 = $45;
(a) Break-even points in units $155,250/$45 = 3,450 units
(b) Break-even point in dollar sales = 3,450 units ? $120= $414,000
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