Compete the break even point in dollars. Selling price = $2.00, Variable cost = $1.00, Fixed cost = $150,000
To find the break-even point in dollars, we need to determine the quantity of units that need to be sold in order to cover all costs.
The formula for calculating the break-even point in units is:
Break-even point (in units) = Fixed costs / Contribution margin per unit
The contribution margin per unit is calculated by subtracting the variable cost per unit from the selling price per unit:
Contribution margin per unit = Selling price - Variable cost per unit
In this case:
Selling price = $2.00
Variable cost = $1.00
Fixed cost = $150,000
Now let's calculate the break-even point in dollars:
Contribution margin per unit = $2.00 - $1.00 = $1.00
Break-even point (in units) = $150,000 / $1.00 = 150,000 units
To find the break-even point in dollars, multiply the break-even point in units by the selling price per unit:
Break-even point (in dollars) = 150,000 units * $2.00 = $300,000
Therefore, the break-even point in dollars is $300,000.