Maggie Mae's has approved a new soft drink to be distributed with its other flavored soft...
Maggie Mae's has approved a new soft drink to be distributed with its other flavored soft drinks. Management has estimated the additional fixed costs for its new soft drink line to be $140,000 and its standard wholesale price of $0.55 per unit will be applied. The associated labor and material costs per unit have been estimated to be $0.25.
How many units to break even? What are the break-even revenues?
Homework Answers
When we consider BEP, we need the following formula:
BEP = FIXED COST / PRICE PER UNIT - VARIABLE COST
BEP = 140000 / (0.55 - 0.25)
BEP = 466666.67 OR 466667 UNITS
2. Break even revenue = breakeven quantity * price per unit
= 466667 * 0.55 = $256666.85
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