Budgeted selling price per unit $123 Budgeted fixed manufacturing costs per unit

Question

Budgeted selling price per unit                                                             $123

Budgeted fixed manufacturing costs per unit                                       $60

Budgeted variable selling costs per unit                                               $12

Budgeted variable manufacturing costs per unit                                  $3

Budgeted fixed selling costs                                                                 $48,000

Budgeted units produced                                                                       10,000 units

Budgeted units sold                                                                               9,600 units

What is the breakeven point in units? (show work)

Explanation / Answer

Hi,

Please find the answer as follows:

Break Even Point (Units) = Fixed Costs/Contribution Margin Per Unit

Fixed Cost = 60*10000 (Fixed Manufacturing Cost) + 48000 (Fixed Selling Cost) = 648000

Contribution Margin Per Unit = 123 (Selling Price) - 3 ( Variable Manufacturing Cost) - 12 (Variable Selling Cost) = 108

Break Even Point = 648000/108 = 6000 units

Answer is 6000 units.

Thanks.

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