A product is currently made in a job shop, where fixed costs are $20,000 per year...
A product is currently made in a job shop, where fixed costs are $20,000 per year and variable cost is $150 per unit. The firm sells the product for $175 per unit. What is the break-even point for this operation? What is the profit (or loss) on a demand of 150 units per year?
Homework Answers
Given,
fixed costs are $20,000 per year
variable cost is $150 per unit.
Selling Price Per Unit $175 per unit
Demand 150 units per year
Breakeven Point =?
profit (or loss) =?
Workings: Contribution Per Unit = Selling Price-Cost Price
=$175-$150=$25
Break Even Point = Fixed Cost/ Contribution Per Unit
=$20000/$25= 800 unit
profit (or loss) = Fixed Cost-Contribution
=$20000-$25*150unit= $16250(Loss)
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