Asked by jessica tudosa on Jul 09, 2024
Verified
Dunkin Company manufactures and sells a single product that sells for $480 per unit; variable costs are $300. Annual fixed costs are $990,000. Current sales volume is $4,200,000. Compute the break-even point in units.
A) 3,750.
B) 10,000.
C) 5,500.
D) 3,300.
E) 6,000.
Fixed Costs
Costs that do not fluctuate with changes in production level or sales volume, such as rent, salaries, and insurance.
- Compute the points at which profits are neutralized in terms of units and currency, applicable to both single and multiple product configurations.
Verified Answer
CK
cengiz kavakl?Jul 09, 2024
Final Answer :
C
Explanation :
To calculate the breakeven point, we use the formula:
Breakeven Point (Units) = Fixed Costs / (Sales Price per Unit - Variable Cost per Unit)
Plugging in the given values, we get:
Breakeven Point (Units) = $990,000 / ($480 - $300) = 5,500 units
Therefore, the answer is (C) 5,500.
Breakeven Point (Units) = Fixed Costs / (Sales Price per Unit - Variable Cost per Unit)
Plugging in the given values, we get:
Breakeven Point (Units) = $990,000 / ($480 - $300) = 5,500 units
Therefore, the answer is (C) 5,500.
Learning Objectives
- Compute the points at which profits are neutralized in terms of units and currency, applicable to both single and multiple product configurations.