Break-even analysis (LO2) Henry Electric sells cookers for $37 per unit, and the variable cost to produce them is $21. Mr. Henry estimates that the fixed costs are $94,500.
a. Compute the break-even point in units.
Break-even point (BE)=(xxx)/(xxx-xxx)
BE=xx/(x-xx)
= $ xx, xxx/($xx-$xx)
=xx, xxx Units
b. Fill in the following table (in dollars) to illustrate that the break-even point has been achieved.
| Sales………= Units sold×Price | = xx, xxx × $xx=$ xxx, xxx |
| – Fixed costs… | =$xx, xxx |
| – Total variable costs…=Units sold × variable cost per unit | = xx, xxx ×$ xx=$ xxx, xxx |
| -Net profit (loss)…= Sales-variable costs-fixed costs | = $ xxx, xxx – $ xxx, xxx – $ xx, xxx = $ xxx, xxx |
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