Chelonia Ltd manufactures small robot toys.It plans to introduce a new product,Spunkie,which is a solar-powered robot jellyfish.The break even point for Spunkie is 1500 units at $100 per unit.Assuming that the safety margin is $2000,what is the budgeted sales (in units)?

Question

Quizplus · Accepted Answer

First, we need to calculate the total revenue needed to cover the fixed costs and the safety margin:

Break-even point = 1500 units
Price per unit = $100
Total revenue at break-even point = 1500 units x $100 per unit = $150,000

Add safety margin = $2000
Total revenue required = $152,000

Next, we can calculate the budgeted sales in units by dividing the total revenue required by the price per unit:

Budgeted sales = Total revenue required / Price per unit
Budgeted sales = $152,000 / $100 per unit
Budgeted sales = 1520 units

Therefore, the best choice is C) 1520 units.

Chelonia Ltd Manufactures Small Robot Toys