Question

given the information in the table below, how many units will be required to be sold to hit the break - even point?

fixed cost	$237,000
variable cost	$0.40
selling price	$2.40

? units

Explanation:

Step1: Recall break - even formula

The break - even point (in units) formula is $Q=\frac{FC}{SP - VC}$, where $FC$ is the fixed cost, $SP$ is the selling price per unit, and $VC$ is the variable cost per unit.

Step2: Identify values

We know that $FC = 237000$, $SP=2.40$, and $VC = 0.40$.

Step3: Calculate contribution margin per unit

The contribution margin per unit is $SP - VC=2.40 - 0.40 = 2.00$.

Step4: Calculate break - even units

Using the formula $Q=\frac{FC}{SP - VC}$, substitute the values: $Q=\frac{237000}{2.00}=118500$.

Answer:

118500