The Hughes Company will incur fixed costs of $500,000 and unit variable costs of $20 on its new wireless earphones. Hughes plans to price the earphones at $50. To break-even, Hughes must sell _____ units.

In Accounting, we know the term Break-Even Point (BEP) which is the point where income from business equals the capital spent. In the BEP position, you do not experience losses or gains. Laymen call the BEP point as a condition where the businesses we run experience a return on investment. So it can be said that the BEP calculation is a very important calculation for those of you who have a business or business.

In compiling the BEP calculation we first determine the 3 elements in the BEP formula, namely:

Fixed Cost. Is the cost incurred for renting a place of business, employees, machinery, and others. These costs are costs we have to pay even though we do not sell at all
Variable Cost. Are the costs incurred in connection with our activities in conducting business? The cost of this variable varies depending on the activities that we do. For example, we have to pay distribution fees (if goods are produced), pay commissions, sales notes, communication costs to customers, etc.
Sales price, which is the selling price that we specify to the buyer.
Margin contribution per unit is the amount of profit we get when we sell our products.

So the BEP formula can be written as follows:

BEP Unit = (Fixed Cost) / (Price per unit - Variable Cost per Unit)
BEP Dollar = (Fixed Cost) / (Margin contribution per unit / Price per Unit)

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Grade: High School

Subject: Business

Keyword: BEP, unit, sell