Lewis Production Company had the following projected information: $\begin{array}{llr}
\text { Selling price per unit } &\$150\
\text {Variable cost per unit } &\$90\
\text { Total fixed costs } &\$300,000
\end{array}$

- What is the profit when one unit more than the break-even point is sold?

Question

Lewis Production Company had the following projected information: $\begin{array}{llr}
  \text { Selling price per unit  } &\$150\
 \text {Variable cost per unit  } &\$90\
 \text {  Total fixed costs } &\$300,000
\end{array}$

- What is the profit when one unit more than the break-even point is sold?

Quizplus · Accepted Answer

The break-even point is where total revenue equals total costs (variable + fixed). To find the break-even quantity, we use the formula: Break-even quantity = Total fixed costs / (Selling price per unit - Variable cost per unit). Here, it's $300,000 / ($150 - $90) = $300,000 / $60 = 5,000 units. Selling one unit more than the break-even point (5,001 units) means the profit for that additional unit is simply the selling price minus the variable cost (since fixed costs are already covered by the break-even sales), which is $150 - $90 = $60.

Lewis Production Company Had the Following Projected Information - What Is the Profit When One Unit More Than