Question

The selling price of Jerrel Corporations only product is $300 per unit and its variable expense is $175 per unit. The compan
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Answer #1

Answer:

a. 6400 Units

b. 7200 units

Explanation:

a.

Break even point in Units = Fixed cost / Contribution margin per unit

Fixed cost = $800000

Contribution margin per unit = Sale price - Variable cost per unit

= $300 - $175 = $125.

Break even point = $800000 / $125 = 6400 Units.

b.

Target profit units = (Fixed cost + Target profit) / Contribution margin per unit

= ($800000 + $100000) / $125

= $900000 / $125

= 7200 Units.

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