The Break Even Point for Mckinny is ???? units Peggy Lane Corp., a producer of m

Question

The Break Even Point for Mckinny is ???? units Peggy Lane Corp., a producer of machine tools, wants to move to a larger site. Two altermative locations have been identified: Bonham and McKinney. Bonham would have fixed costs of $780,000 per year and variable costs of $13,000 per standard unit produced. Mckinney would have annual fixed costs of $960,000 and variable costs of $12,000 per standard unit. The finished items sell for $30,000 each a) The volume of output at which both the locations have the same profit 180 standard units (round your response to the nearest whole number) b) Based on the analysis of the volume, after rounding the numbers to the nearest whole number, Bonham is superior below 180 standard units c) Based on the analysis of the volume, after rounding the numbers to the nearest whole number, Mckinney is superior above 180 standard units 6) The break-even point for Bonham is units. (Enter your response rounded to the nearest whole number)

Explanation / Answer

Break even point = FIXED COST / ( REVENUE - VARIABLE COST)

Here, FC = 960,000

Revenue = 30,000

VC = 12,000

BEP = 960,000 / (30000 - 12000)

= 53.33 = 53 units.

BEP for Bonham

Here, FC = 780,000

Revenue = 30,000

VC = 13,000

BEP = 780,000 / (30000 - 13000)

BEP = 45.88 = 45 units

Thank you for the rating.

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