A manufacturer plans to introduce a new type of shirt based on the following information. The selling price is $57.00; variable cost per unit is $18.00; fixed costs are $8,000.00; and capacity per period is 600 units. Calculate the break even point in dollar Calculate the break even point as a percent of capacity
To calculate the break even point in units, we can use the formula:
Break even point (units) = Fixed costs / (Selling price per unit - Variable cost per unit)
Break even point (units) = $8,000 / ($57 - $18)
Break even point (units) = 200 units
To calculate the break even point in dollars, we can simply multiply the break even point in units by the selling price per unit:
Break even point (dollars) = 200 units x $57/unit
Break even point (dollars) = $11,400
To calculate the break even point as a percent of capacity, we can use the formula:
Break even point (units) / Capacity x 100%
Break even point (units) / 600 x 100%
200 units / 600 x 100%
33.33%
Therefore, the break even point is $11,400 and 33.33% of capacity.