Question

assume fixed costs equal $300,000. The price per unit equals $10 and the variable cost per unit equals $7. Find the breakeven point in terms of both units sold and sales revenue

Answer 1

Let S=Sales
Let FC=Fixed Costs
Let VC=Variable Costs
Let x=Units

Then, S=FC+VC

S=10x
FC=$300,000
VC=3x

10x=300,000+7x
3x=300,000
x=100,000 units

(10)(100,000)=300,000+(7)(100,000)
$1,000,000=$1,000,000

The breakeven point is 100,000 units and $1,000,000 because the 100,000 units make the Sales=The Total Costs