Question

ekook Break-even Quantity Shapland Inc. has fixed operating costs of $400,000 and variable costs of $40 per unit. If it sells the product for $80 per unit, what is the break-even quantity Round your answer to the nearest whole numer unts

Answer 1

First question is being answered here.

For break even quantity, we need to calculate contribution margin per unit:

Contribution margin per unit = Selling price per unit - Variable cost

Contribution margin per unit = $80 - $40 = $40

Now, break even quantity is given by:

Break even quantity = Fixed cost / Contribution margin per unit

Putting the values in the above formula, we get,

Break even quantity = $400000 / $40 = 10000 units