Neverlate is world famous for its precision pocket watches. The company has esti

Question

Neverlate is world famous for its precision pocket watches. The company has estimated that variable manufacturing costs and variable selling costs per watch will be $72 and $43, respectively, for 20xx. Also during 20xx, the company is expecting fixed manufacturing costs to total $291,600 and fixed general and administrative expenses to amount to $253,175. The anticipated selling price of each watch is $500.

a. Compute the breakeven point in sales units.
units

b. Compute the breakeven point in sales dollars.
$

Explanation / Answer

a. breakeven point in sales units = ($291,600+$253,175)/(500-72-43) =1415 units b. breakeven point in sales dollars =1415*500 = $707,500.00

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