Answer:
a)Break-even point = 6,800 units
b) Break-even point =5780 units
Explanation:
Break-even point is the level of activity that achieves no profit or loss. At this level profit is zero because the the total revenue is equal to total cost.
The break-even point is calculated as
Units to achieve target profit = (Total general fixed cost for the period)/ contribution per unit
Contribution per unit = Selling Price - Variable cost
Contribution per unit = 67 - 33 = 34
Fixed cost =231,200
So the units requited to achieve break-even point:
Break-even point = 231,200/34 = 6,800 units
Break-even point = 6,800 units
b) If the selling price wete increased to 73
The break-even point = 231,200/ (73- 33) = 5,780 units
Break-even point =5780 units
