MacLean Company produces a single product. Following is cost information: $\begin{array}{lll}&&\text { Variable Cost }\
&\text { Fixed Cost }&\text { Per Unit }\
\text { Manufacturing costs } & \$ 35,000 & \$ 15 \
\text { Non-manufacturing costs } & 60,000 & 10
\end{array}$ If the product sells for $60, how many units must be sold to break even?

Question

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). Here, Total Fixed Costs = $35,000 (Manufacturing) + $60,000 (Non-manufacturing) = $95,000. Variable Cost per Unit = $15 (Manufacturing) + $10 (Non-manufacturing) = $25. Selling Price per Unit = $60. Thus, Break-even point in units = $95,000 / ($60 - $25) = $95,000 / $35 = 2,714 units.

MacLean Company Produces a Single Product If the Product Sells for $60, How Many Units Must