Maha Manufacturing produces a single product that sells for $80. Variable costs per unit equal $32. The company expects total fixed costs to be $72,000 for the next month at the projected sales level of 2,000 units. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately.
What is the current breakeven point in terms of number of units?

Question

Quizplus · Accepted Answer

The breakeven point in units is calculated by dividing the total fixed costs by the contribution margin per unit (selling price per unit - variable cost per unit). Here, it's $72,000 / ($80 - $32) = $72,000 / $48 = 1,500 units.

Maha Manufacturing Produces a Single Product That Sells for $80