Question

1. What is the breakeven in units based on the following information?

Sales: $12 per unit

Variable costs: $8 per unit

Fixed Costs: $240,000

2. What are the required sales if sam's company desires net income of 60,000 based on the following information:

Sales-$60 per unit

Variable costs: $15 per unit

Fixed costs: $120,000

Answer 1

1)

Sales = $12 per unit

Variable cost = $8 per unit

Contribution margin = Sales - variable cost = $12 - $8 = $4 per unit

Fixed cost = $240,000

Break even units = Fixed cost / contribution margin per unit

Break even units = $240,000 / $4

Break even units = 60,000 units.

2) Desired net income = $60,000

Sales = $60 per unit

variable cost = $15 per unit

Contribution margin per unit = $45

Fixed cost = $120,000

Required sales units = ($120,000 + $60,000) / $45

Required sales units = 4000 units

Required sales in dollars = (Fixed cost + desired profit) / (Contribution margin/sales)

Required sales in dollars = ($120,000 + $60,000) / ($45/$60)

Required sales in dollars = $240,000