Next, Derek Thompson looks at the profitability report of the only product produced in the Chandler...
Next, Derek Thompson looks at the profitability report of the only product produced in the Chandler plant.
| Product Y | |
| Sales price | 69 |
| Variable costs | 31 |
| Overhead allocation | 14 |
The Chandler plant currently produces 15,000 units of Product X but
its maximum capacity is 38,000 units. Assume that all of the annual
overhead costs of 286,000 is fixed. What is the break-even point of
the Chandler plant?
Homework Answers
Break-even point will be 7,526 units or $519,316 in sales revenue
Working
| A | Sale Price per unit | $ 69.00 |
| B | Variable Cost per Unit | $ 31.00 |
| C=A - B | Unit Contribution | $ 38.00 |
| D | Total Fixed cost | $ 286,000.00 |
| E=D/C | Breakeven point in units | 7,526 |
| F= E x A | Breakeven in sales dollars | $ 519,316 |
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