The following data pertain to last month's operations:
Selling price $30 per unit
Variable production cost $15 per unit
Fixed production cost $80,000
Variable selling & admin. expense $3 per unit
Fixed selling & admin. expenses $40,000
The break-even point in dollars is:
A) $300,000. C) $200,000.
B) $240,000. D) $160,000.
First of all we need to determine the total fixed costs and total variable cost per unit:
Total fixed costs= Fixed Production Cost + Fixed Selling & Admin. Expenses
= 80,000 +40,000
This solution assists in a break-even analysis.