What is the break even in units?
Bottle, Label and Production (direct material and labor) = $9.12 per 12 oz. can
Advertising & promotion (fixed) = $218,000
Company Overhead (fixed) = $354,000
Formula I'm using:
Breakeven in units (BEU)= total fixed cost / (unit price – unit variable costs)
BEU= ($218,00 + $354,000) / (($9.12 / 12) – unit variable costs)
(I'm stuck on what to put in for unit variable costs.
To calculate the break-even in units, you need to determine the unit variable costs. The unit variable costs refer to the costs that vary with each unit produced.
In this case, the direct material and labor costs ($9.12 per 12 oz. can) are already included in the total cost per unit. Therefore, you do not need to include that in the unit variable costs.
The unit variable costs in this scenario would typically include any additional costs that vary with each unit produced, such as packaging or shipping costs.
If there are no additional costs included in the unit variable costs, you can calculate the break-even in units by substituting the values into the formula:
Breakeven in units (BEU) = Total fixed cost / (Unit price - Unit variable costs)
BEU = ($218,000 + $354,000) / (($9.12 / 12) - 0)
Since there are no additional variable costs mentioned in your question, you can assume that the unit variable costs are zero. Therefore, you can proceed with the calculation as follows:
BEU = ($218,000 + $354,000) / (($9.12 / 12) - 0)
BEU = $572,000 / ($0.76 - 0)
BEU = $572,000 / $0.76
BEU ≈ 752,632
Therefore, the break-even in units is approximately 752,632 units.
To determine the break-even in units, you need to calculate the unit variable costs. The unit variable costs include any costs that are directly tied to the production and sale of each unit. In this case, the only variable cost mentioned is the cost of bottle, label, and production, which is given as $9.12 per 12 oz. can.
To calculate the unit variable costs, you need to divide the total cost of bottle, label, and production by the number of units produced in order to find the cost per unit:
Unit variable costs = Total cost of bottle, label, and production / Number of units
Since the information about the number of units produced is not provided, you won't be able to calculate the specific unit variable costs. However, you can use the given information to determine the break-even in units based on different scenarios.
For example, if you assume that the number of units produced is X, you can substitute the variable costs into the break-even formula:
BEU = ($218,000 + $354,000) / (($9.12 / 12) - Unit variable costs)
Without the specific number of units produced or the exact costs, you won't be able to calculate the break-even in units accurately. You may need to consult the relevant financial statements or management reports to obtain the necessary information for a precise calculation.