Break-even analysis: Sherwin Furniture makes period pieces. The firm has total fixed costs of $632,750. The average piece is sold at a price of $2,125 and involves variable costs of $1,675 per unit. What is the break-even point for this firm?

Question

Quizplus · Accepted Answer

The break-even point is calculated by dividing the total fixed costs by the contribution margin per unit (selling price per unit minus variable cost per unit). Here, it is $632,750 / ($2,125 - $1,675) = 1,406 units.

Break-Even Analysis: Sherwin Furniture Makes Period Pieces