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14. Sabino Inc. manufactures widgets at a variable
cost of $1.05 per unit and has a fixed cost of
$404,000. If the sales price is $2.50, how many must
be made and sold to break even?

A. 156,992
B. 278,621
C. 287, 301
D. Impossible to break even

Respuesta :

Samawati

Answer:

B. 278,621

Explanation:

The break-even point is equal to fixed cost divided by contribution margin per unit from the contribution margin concept.

Break-even point = Fixed costs/ contribution margin per unit

contribution margin per unit = selling price- variable cost

In this case,

fixed costs are $404,000.

selling price $2.50,

variable cost  $1.05

Contribution margin per unit : $2.50-$1.05= $1.45

Break-even point = $404,000/ $1.45

=278,620.689

=278,621 units

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