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  • Selling Price Per Unit

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    Subhan Ahmad
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    The document calculates the profit and loss for a company that sells units at $25 each with $15 in variable costs per unit and $140,000 in fixed costs. At 8,000 units sold, there was a $60,000 loss, but at 18,000 units there would be a $40,000 profit. The break-even point is calculated at 14,000 units. Raising the price to $31 would lower the break-even point to 8,750 units, and raising price to $31 while increasing variable costs to $23 would raise the break-even point to 17,500 units.

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    Selling Price per unit

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    The document calculates the profit and loss for a company that sells units at $25 each with $15 in variable costs per unit and $140,000 in fixed costs. At 8,000 units sold, there was a $60,000 loss, but at 18,000 units there would be a $40,000 profit. The break-even point is calculated at 14,000 units. Raising the price to $31 would lower the break-even point to 8,750 units, and raising price to $31 while increasing variable costs to $23 would raise the break-even point to 17,500 units.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    4 views2 pages

    Selling Price Per Unit

    Uploaded by

    Subhan Ahmad
    The document calculates the profit and loss for a company that sells units at $25 each with $15 in variable costs per unit and $140,000 in fixed costs. At 8,000 units sold, there was a $60,000 loss, but at 18,000 units there would be a $40,000 profit. The break-even point is calculated at 14,000 units. Raising the price to $31 would lower the break-even point to 8,750 units, and raising price to $31 while increasing variable costs to $23 would raise the break-even point to 17,500 units.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 2

    Selling Price per unit $25

    Total Fixed Cost $140,000


    Variable Cost per unit $15
    Total units sold 8,000

    (a) 
    Calculating Gain/Loss at 8,000units Sales:

    Sales (8,000 * $25) $200,000


    Less: VC (8,000 * $15) $120,000

    Contribution $80,000
    Less: Fixed Cost $140,000

    Loss ($60,000)

    Calculating Gain/Loss at 18,000units Sales:

    Sales (18,000 * $25) $450,000


    Less: VC (18,000 * $15) $270,000

    Contribution $180,000
    Less: Fixed Cost $140,000

    Profit $40,000

    (b) Calculating Break-even Point :

    Fixed Operating Costs = $140,000


    Variable Cost per unit  = $15 per watch
    Selling Price per unit    = $25 per watch

    Break-even Point (in units) = Total Fixed Costs / Contribution


    Margin per unit
    Break-even Point (in units) = $140,000 / ($25-$15)

    Break-even Point (in units) = 14,000 units

    ( c) Calculating Breakeven point if the selling price were


    raised to $31:

    Break-even Point (in units) = $140,000 / ($31-$15)

    Break-even Point (inunits) = 8,750 units


    (d) Calculating Break even point if theseeling price were raised to $31
    and vairable costs rose $23 :

    Break-even Point (inunits) = $140,000 / ($31-$23)

    Break-even Point (inunits) = 17,500 units

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