boland company sells a product that is priced at $20 per unit. the per unit contribution margin is equal to 25 percent of the sales price. if fixed cost amount to $81,500 and the company has a desired profit of $46,500, the number of units that must be sold to earn the desired profit is (do not round intermediate calculations.)

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08-09-2022
Business

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boland company sells a product that is priced at $20 per unit. the per unit contribution margin is equal to 25 percent of the sales price. if fixed cost amount to $81,500 and the company has a desired profit of $46,500, the number of units that must be sold to earn the desired profit is (do not round intermediate calculations.)

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varshamittal029 varshamittal029 · Answer 1 · 2022-09-15T17:47:04+02:00

We need to calculate the, number of units to be sold to achieve a desired profit of 46,500 with 81,500 as fixed cost. which means we need to calculate the break even point in units for the given parameters.

Number of units to be sold = (Desired profit + Fixed cost)/Contribution per unit

Contribution per unit = 20*25% = 5 per unit

Fixed cost = 81,500

Desired Profit = 46,500

Number of units to be sold = (46,500+81,500) / 5 = 128,000 / 5 = 25,600

Hence 25,600 units is the break even point for a profit of 46,500 with fixed cost of 81,500.

In accounting, the breakeven point is calculated by dividing the fixed costs of production by the worth per unit minus the variable costs of production.

The breakeven point is that the level of production at which the prices of production equal the revenues for a product.

In investing, the breakeven point is alleged to be achieved when the market value of an asset is that the same as its original cost.

Therefore, Number of units to be sold(BEP) is 25,600 units

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