Econ Pty Ltd produced and sold 45 000 units of a single product last year.Data concerning the year's profit and loss statement is as follows:
What was Econ's break-even point (rounded)in unit sales?

Question

Quizplus · Accepted Answer

The break-even point is when the total revenue equals total cost. 
Total cost = fixed cost + variable cost 
Fixed cost = $900,000 
Variable cost per unit = $9 
Total variable cost = 45,000 units x $9 per unit = $405,000 
Total cost = $900,000 + $405,000 = $1,305,000

To find the break-even point in units, we divide the total cost by the selling price per unit minus the variable cost per unit: 
Break-even point (units) = Total cost / (Selling price per unit - Variable cost per unit) 
$1,305,000 / (P - $9) = 45,000 
P - $9 = $29 
P = $38

Therefore, the break-even point is 1,080,000 units ($38 x 45,000 units).

Econ Pty Ltd Produced and Sold 45 000 Units of a Single