Owen Conner works part-time packaging software for a local distribution company
ID: 2744205 • Letter: O
Question
Owen Conner works part-time packaging software for a local distribution company in Indiana. The annual fixed cost is $15,000 for this process, direct labor is $3.50 per package, and material is $4.50 per package. The selling price will be $12.50 per package. a. What is the break-even point in units? (Do not round intermediate calculations. Roundup your answer to the next whole number.) Break-even point units b. How much revenue do we need to take in before breaking even? (Round your answer to the nearest dollar amount.) Break-even point $
Explanation / Answer
Analysis: Fixed Cost = $ 15000
Direct Labor = $ 3.50
Material = $ 4.50
Selling Price = $ 12.50
a) Break even point in units = Fixed Cost
Selling Price per unit - Variable Cost per unit
= $ 15000
$12.50 - $3.50 - $4.50
= 3334 Units
b) Break Even Point in Dollers = Sales Price per unit * Break even point in units
= $12.50 * 3334 Units
= $ 41675
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