Asked by Amanda Sammons on May 28, 2024
Verified
Waterfall Company sells a product for $150 per unit. The variable cost is $80 per unit, and fixed costs are $270,000.
Determine the (a) break-even point in sales units and (b) break-even point in sales units if the company desires a target profit of $36,000. Round your answer to the nearest whole number.
Break-even Point
The volume of production or sales at which total revenues equal total costs, resulting in neither profit nor loss.
Variable Cost
Expenses that vary directly with the level of production or sales volume, such as raw materials and direct labor.
- Calculate the point of break-even in unit counts and financial amounts, considering its significance in the strategic planning of business operations.
Verified Answer
JH
Jatayaa HowellJun 02, 2024
Final Answer :
a. $150 - $80 = $70
$270,000 ÷ $70 = 3,857 units
b. ($270,000 + $36,000) ÷ $70 = 4,371 units
$270,000 ÷ $70 = 3,857 units
b. ($270,000 + $36,000) ÷ $70 = 4,371 units
Learning Objectives
- Calculate the point of break-even in unit counts and financial amounts, considering its significance in the strategic planning of business operations.