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Break-Even Point and Target Profit Measured in Units (Single Product). Nellie Company has monthly fixed costs totaling S100,000 and variable costs of $20 per unit. Each unit of product is sold for $25. Required: Calculate the contribution margin per unit Find the break-even point in units. How many units must be sold to earn a monthly profit of $40,000?

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Computation of Contribution margin per unit : Particulars Selling price per unit Less: Variable cost per unit Contribution margin per unit Per Unit $ 25.00 20.00 5.00 Contribution margin ratio (5/25) 100 Contribution margin ratio-20% Computation of break-even point in Units:- Particulars Fixed cost in S (A) Contribution margin per unit (B) Break-even point in units (A/B) Units 100,000 5.00 20,000 Units to be sold for earning a profit of S 40,000 Particulars Required Profit Add: Fixed cost Required Contribution (20%) Amount S 40,000 100,000 140,000 Required sales value (140000/0.20) Required sales value = $ 700,000/. Selling price per unit is - S25 Required sales unit is (700000/25) Required sales unit is 28,000

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