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Break even points and profits

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Hazardous Toys Company produces boomerangs that sell for $8 each and have a variable cost of $7.50. Fixed costs are $15,000.

a. Compute the break-even point in units.
b. Find the sales (in units) needed to earn a profit of $25,000

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Solution Summary

Most companies that sell any type of material product have fixed and variable costs. The financial managers of the company need to report these costs to senior leadership with a great deal of accuracy in order to produce a viable sales forecasting report. Without these costs and the appropriate calculations, a company could miscalculate the amount of sales needed to break even and earn a profit.

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