Question

Break-Even Point Analysis J Widget Corporation buys completed Widgets from Widget manufacturers and sells them to the public through a catalog. Currently J Widget Corporation purchases Widgets from 2 vendors. Total fixed cost for last year was $1,200,000. Vendor X. Per unit price if Description Widget Quantity 0- 50 $3.60 Quantity 51-100 $3.40 Vendor Y: Per unit price if Description Widget Quantity 0-50 $4.00 Quantity 51-100 $3.00 Last year J Widget sold 500,000 widgets at a cost of $4.50 per widget for total revenue of $2,250,000. This year, the owner wants to raise the price J widget Corporation charges to its customers to $4.60 per widget. At $4.60 per widget the CFO of the company estimates that there will be 2% less demand for widgets this year than last year. Vendor Name: Units Units Total Cost purchased purchased @ 0-50 quantity 0-50 quantity $864,000 $880,000 180,000 Vendor X Vendor Y 70,000 130,000120,000 What will the break-even point in units be this year if the company continues the same purchasing practices from last year.

Answer 1

Sales volume	X
Sales price	4.6
Variable cost	1744000
Fixed cost	1200000

Break even point in units=(Fixed cost+ variable cost)/ sales price

(1744000+120000)/4.6= 640000