Chelonia Ltd manufactures small robot toys. It plans to introduce a new product, Spunkie, which is a solar-powered robot jellyfish. The break even point for Spunkie is 1500 units at $100 per unit. Assuming that the safety margin is $2000, what are the budgeted sales (in units)?

Question

Quizplus · Accepted Answer

To calculate the budgeted sales (in units) with the safety margin, we need to add the safety margin to the total revenue required to achieve the break even point.

Total revenue required to achieve the break even point = 1500 units x $100 per unit = $150,000

Adding the safety margin of $2000 to this gives us: $150,000 + $2000 = $152,000

To find the number of units needed to achieve this revenue, we divide $152,000 by the selling price of $100 per unit:

$152,000 ÷ $100 per unit = 1520 units

Therefore, the budgeted sales (in units) with the safety margin is 1520 units.

Chelonia Ltd Manufactures Small Robot Toys