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The following is information for the month of October for Smith Company who manufactures ski helmets....

The following is information for the month of October for Smith Company who manufactures ski helmets. What is the breakeven point in units for Smith Company? (round up to the nearest helmet, if it is 200.1 helmets then round to 201 helmets)

Total

Per Unit

Sales (5,000 helmets)

$300,000

$60

Variable costs

$180,000

$36

Contribution margin

$120,000

$24

Fixed Expenses

$100,000

Operating Income

$20,000
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Answer #1

ANSWER :

the breakeven point in units for Smith Company is 4,167 units (rounded up to the nearest helmet, it is 4,166.6 helmets then rounded to 4,167 helmets).

Explanation :

For the calculation of Break-even point, we only need Fixed Expenses and contribution margin.

Formula for calculation of Break-even Point(in units)

BEP (break-even point) = Fixed Expenses/Contribution margin (per unit)


Given,

Fixed Expenses = $100,000
Contribution margin (per unit) = $24


So,

Break-even Point (in units) = $100,000/$24
= 4,166.66667 units
(rounded up units = 4,167 units)


Answer : The breakeven point in units for Smith Company is 4,167 units.

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