Asked by Gillian Sanders on May 19, 2024
Verified
Ferris Inc. has a unit selling price of $500 variable cost per unit of $300 and fixed costs of $260000.
Instructions
Compute the break-even point in units and in sales dollars.
Variable Cost
Costs that change in proportion to the level of activity or volume of production.
Break-Even Point
The level of production or sales at which total costs equal total revenue, resulting in no net profit or loss.
Fixed Costs
Costs that remain constant in total regardless of changes in the level of production or sales volume.
- Establish the break-even criteria in units and monetary values, considering different input variables.
- Scrutinize the fiscal performance and estimate forthcoming results with the help of CVP concepts.
Verified Answer
RO
Regan OlamideMay 19, 2024
Final Answer :
$500X - $300X - $260000 = 0
Break-even point in units = X = 1300 units ($260000 ÷ $200)
Break-even point in dollars = 1300 units × $500 = $650000
Break-even point in units = X = 1300 units ($260000 ÷ $200)
Break-even point in dollars = 1300 units × $500 = $650000
Learning Objectives
- Establish the break-even criteria in units and monetary values, considering different input variables.
- Scrutinize the fiscal performance and estimate forthcoming results with the help of CVP concepts.