Question

The Atlantic Company sells a product with a break-even point of 6,195 sales units. The variable cost is $86 per unit, and forced costs are $297,360. Determine the unit sales price. Round answer to nearest whole number. Determine the break-even points in sales units if the company desires a target profit of $66,864. Round answer to the nearest whole number units

Answer 1

Correct Answer:

Requirement 1:

Sales price = $ 134

Working:

Break-even point = Fixed cost / Sales price – variable cost

6195 = 297360 / (sales price – 86)

Therefore:

Sales price – 86 = 297360 / 6195

= sales price – 86 = 48

Sales price = 48+86

Sales price = $ 134

Requirement 2:

Break-even unit

7588 Units

Working:

A	sales price	$                134
B	Less: Variable cost	$                  86
C =A-B	Contribution margin	$                  48
D	Fixed cost	$        297,360
E	Target profit	$          66,864
F =D+E	Total	$        364,224
G =F/C	Break-even unit	7588

End of answer.

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