The Cumberland Company provides the following information: $\begin{array} { l }
\text {Sales (250,000 units) }&\$625,000\
\text {Manufacturing costs: }&\
\text {Variable }&212,500\
\text { Fixed}&37,500\
\text {Selling and administrative costs: }&\
\text {Variable }&100,000\
\text { Fixed}&25,000\
\end{array}$

What is the break-even point in units for Cumberland?

Question

The Cumberland Company provides the following information: $\begin{array} { l  }
 \text {Sales (250,000 units) }&\$625,000\
 \text {Manufacturing costs: }&\
 \text {Variable }&212,500\
 \text { Fixed}&37,500\
 \text {Selling and administrative costs: }&\
 \text {Variable }&100,000\
 \text { Fixed}&25,000\
\end{array}$

What is the break-even point in units for Cumberland?

Quizplus · Accepted Answer

To calculate the break-even point in units, we use the formula: Break-even point in units = Total Fixed Costs / (Selling Price per Unit - Variable Cost per Unit). The total fixed costs are $37,500 + 25,000 = 62,500$. The selling price per unit is $\$625,000 / 250,000 = \$2.50$ per unit. The total variable cost per unit is $(212,500 + 100,000) / 250,000 = \$1.25$ per unit. Thus, the break-even point in units = $62,500 / (\$2.50 - \$1.25) = 62,500 / \$1.25 = 50,000$ units.

The Cumberland Company Provides the Following Information What Is the Break-Even Point in Units for Cumberland? A)41,668

The Cumberland Company Provides the Following Information What Is the Break-Even Point in Units for Cumberland?
A)41,668