I am having a fit trying to figure the breakeven point for absorption costing. The question I have is Cost of product is $1.35. Variable costs are $1.05 per unit, fixed production costs are $90,000 per month at a level of 400,000 units. Fixed administrative costs total 30,000. Sales average 400,000 units a month, with planned production of 400,000.

1,05+ ((90000+30000):x) =1.35
120000:0,3 = 400000
Because there are no fixed overhea cost is the asnwer for both variable and absorptioncosting the same!

B/E Units = N
Fixed Manufacturing Overhead Rate (FMOR) = 90,000/400,000 = .225
Unit Contribution Margin = Sales Price - Variable Costs = 1.35-1.05 =.30
N= Total Fixed Costs + Target Operating Income + (FMOR(N-Units Produced) / Unit Contribution Margin
N = (90,000 + 30,000) + 0 (There is no Target Income in this case) + (.225 (N - 400,000) / .30
N = 120,000 + .225N - (.225 x -400,000) / .30
N = 120,000 + .225N - 90,000 / .30
N = 30,000 + .225N / .30
.30N = 30,000 + .225N
.075N = 30,000
N = 400,000