Question

Target Profit Trailblazer Company sells a product for $210 per unit. The variable cost is $90 per unit, and flxed costs are $396,000. Determine (a) the break-even point in sales units and (b) the break-even point in sales units if the company desires a target profit of $138,600. 396,000 Xunits a. Break-even point in sales units b. Break-even point in sales units if the company desires a target profit of 120 X units $138,600 Feedback YCheck My Work a. Unit sales price minus unit variable costs equals unit contribution margin, Fixed costs divided by unit contribution margin break-even point in units b. (Fixed costs+ Target profit) divided by unit contribution marginsales units.

Answer 1

a.

Selling price per unit = $210

Variable cost per unit = $90

Fixed cost = $396,000

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

= 210 - 90

= $120

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

= 396,000/120

= 3,300 units

b.

Number of unit to earn target profit of $138,600 = (Fixed cost + Target profit)/Contribution margin per unit

= (396,000 + 138,600)/120

= 534,600/120

= 4,455 units

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