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Managerial Accounting: Break-Even Point

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Carolina Products has the following product information:
Sales price - $25.00 per unit
Variable costs - $15.00 per unit
Fixed costs (total) - $50,000

Required: Calculate the following based on the above information:
A. How many units need to be sold in order to break-even?
B. Calculate the increase in net income if an additional 1,000 units over the break-even point are sold.
C. How many units need to be sold in order to earn a target profit of $600,000? (Ignore taxes)

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Solution Summary

The expert examines the break-even point for managerial accounting.

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A. How many units needs to be sold in order to break-even?
Break Even = Total Fixed Cost / (sales price - Variable cost) = $50,000/($25.00-$15.00)=5,000 units

B. ...

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