Answer:
$2.23809
Explanation:
As we know that
In order to break even, the sales revenues = Fixed costs + Variable costs.
So we assume the sales units be X
Sales price per unit × Units = Fixed costs + Variable cost per unit × Unit
X × 42,000 bags = $10,000 + $2.0 × 42,000
X × 42,000 = $10,000 + $84,000
X × 42,000 = $94,000
So, X equals to
= $94,000 ÷ 42,000
= $2.23809
The price that the division must charge in order to break even is $2,24.
The point of Break-Even is the point where Revenue and Expenses meets.
Given Information
Sales price per unit = X
Units = 42,000 bag
Fixed costs = $10,000
Variable cost per unit = $2
We assume sales units to be X
Sales price per unit * Units = Fixed costs + Variable cost per unit*Unit
X * 42,000 bags = $10,000 + $2.0*42,000 bags
X * 42,000 = $10,000 + $84,000
X * 42,000 = $94,00
X = $94,000/42,000
X = $2.23809
X = $2.24
Therefore, the price that the division must charge in order to break even is $2,24.
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