Question

Bold Company has fixed costs totaling $380,000 per month, the variable cost per unit is $100, and the selling price per unit is $260. What is the breakeven point in units?

Answer 1

Answer:

9 units

Explanation:

The contribution margin is the amount available per unit to meet fixed costs and profits. It is calculated by subtracting variable costs from selling price.

For Bold company, contribution margin is equal to selling price-  variable costs.

=$260 -$100

=$160

Break-even points =  Fixed cost / contribution margin per unit

= $380,000/$160

=$ 2,375.00

Contribution margin in units = $ 2,375.00/$260

=9.13

=9 units