Question

Information concerning a product produced by Zachary Company appears as follows: Sales price per unit Variable cost per unit Total annual fixed manufacturing and operating costs $ 162 $ 82 $536,000 Required Determine the following: a. Contribution margin per unit. b. Number of units that Zachary must sell to break even. c. Sales level in units that Zachary must reach to earn a profit of $240,000. a. Contribution margin per unit b. Break-even in units c. Required sales in units

Answer 1

Contribution Margin per unit = Sales price per unit - Variable costs per unit = 162 - 82 = 80

Breakeven point in units = Fixed cost/Contribution margin per unit = 536,000/80 = 6700 units

Required sales = (Fixed cost + Target profit)/Contribution margin per unit = (536,000+240,000)/80 = 9700 units