Ivanhoe, Inc, has a unit selling price of $580, variable cost per unit of $340, and total fixed costs of $264,000. Compute the break-even salesunits and sales dollars. Break-even point (in units) units Break-even point (in dollar)
To calculate the break-even sales units, we can use the formula:
Break-even sales units = Total fixed costs / (Unit selling price - Variable cost per unit)
Break-even sales units = $264,000 / ($580 - $340)
Break-even sales units = $264,000 / $240
Break-even sales units = 1,100 units
To calculate the break-even sales dollars, we can multiply the break-even sales units by the unit selling price:
Break-even sales dollars = Break-even sales units * Unit selling price
Break-even sales dollars = 1,100 units * $580
Break-even sales dollars = $638,000
To calculate the break-even sales units, we need to divide the total fixed costs by the contribution margin per unit.
Contribution margin per unit is the difference between the selling price per unit and the variable cost per unit.
Contribution margin per unit = Selling price per unit - Variable cost per unit
Contribution margin per unit = $580 - $340 = $240
Break-even sales units = Total fixed costs / Contribution margin per unit
Break-even sales units = $264,000 / $240
Break-even sales units = 1,100 units
To calculate the break-even point in dollars, we need to multiply the break-even sales units by the selling price per unit.
Break-even point (in dollars) = Break-even sales units * Selling price per unit
Break-even point (in dollars) = 1,100 units * $580
Break-even point (in dollars) = $638,000
Therefore, the break-even point is 1,100 units and $638,000 in sales dollars.