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m/ilm/takeAssignment/takeAssignmentMain.do?invoker-assignments&takeAssignmentSessionlocator; assignment-take&inprogress-false; eBook Show Me How Calculator Break-Even Point Nicolas Enterprises sells a product for $118 per unit. The variable cost is $80 per unit, while fixed costs are $271,472. Determine (a) the break-even point in sales units and (b) the break-even point if the selling price were increased to $127 per unit. a. Break-even point in sales units units ( b. Break-even point if the selling price were increased to $127 per unit unitsExplanation / Answer
a.
Selling price per unit = 118
Variable cost per unit = 80
Contribution margin per unit = Selling price per unit - Variable cost per unit = 118 - 80 = 38
Fixed costs = 271,472
Breakeven point in sales units = Fixed costs / Contribution margin per unit
= 271,472 / 38
= 7,144 units
b.
Selling price per unit = 127
Variable cost per unit = 80
Contribution margin per unit = Selling price per unit - Variable cost per unit = 127 - 80 = 47
Fixed costs = 271,472
Breakeven point in sales units = Fixed costs / Contribution margin per unit
= 271,472 / 47
= 5,776 units
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Selling price per unit = 270
Variable cost per unit = 150
Contribution margin per unit = Selling price per unit - Variable cost per unit = 270 - 150 = 120
Fixed costs = 864,000
a.
Breakeven point in sales units = Fixed costs / Contribution margin per unit
= 864,000 / 120
= 7,200 units
b.
Breakeven point for target profit = (fixed costs+target income) / Contribution margin per unit
= (864,000+216,000) / 120
= 9,000 units
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