Currently, the selling price per unit of product x is $320. The variable cost per unit is $270 and the total fixed costs are places, e.g.5,275.) 609 000 the company required a net profit of $35,000 ho many units would need to be sold? Calculate the following:
Solution:-
1. The contribution margin per unit:-
Contribution margin per unit | $50 |
Explanation:-
Selling price per unit | $320 |
Less:- Variable cost per unit | $270 |
= Contribution margin per unit | $50 |
2. The number of units to be sold to break-even:-
Number of units to be sold to break-even | 12,180 |
Explanation:-
Total fixed cost | $609,000 |
Divide by Contribution margin per unit | $50 |
= Number of unit to be sold to break-even | 12,180 |
3. The total sales achieved at break-even:-
Total sales achieved at break-even |
Explanation:-
Number of unit to be sold to break-even | 12,180 |
Multiply by selling price per unit | $320 |
= Total sales achieved at break-even | 3,897,600 |
4. The break-even in units required to make $35,000 net profit:-
Break-even in units required to make $35,000 net profit | 12,880 |
Explanation:-
Total fixed cost | $609,000 |
Add:- Required net profit | $35,000 |
= Total Contribution margin | $644,000 |
Divide by contribution margin per unit | $50 |
Break-even in units required to make $35,000 net profit | 12,880 |
Using the above information, a proposal is being evaluated to increase the unit selling price to $350
5. The number of units to be sold to break-even based on the new selling price:-
Number of units to be sold to break-even based on the new selling price |
Explanation:-
Total fixed cost | $609,000 |
Divide by Contribution margin per unit | $80 |
= Number of units to be sold to break-even based on the new selling price | 7,613 |
6. The total sales achieved at the new selling price to break-even:-
Total sales achieved at break-even | 2,664,550 |
Explanation:-
Number of unit to be sold to break-even | 7,613 |
Multiply by selling price per unit | $350 |
= Total sales achieved at break-even | 2,664,550 |
Question 3 Currently, the selling price per unit of product x is $320. The variable cost...
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