Here is my question and how I tried to answer it

Assume fixed cost 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.


$300,000 divided by $10= 30,000 units
$300,000 divided by $7= 42,857.14 sales revenue

$300,000 divided by $10= 30,000 units
$300,000 divided by $7= 42,857.14 sales revenue

YOU GAVE THE WRONG ANSWER

THE FORMULAE TO FIND OUT BREAK EVEN POINT IS
FIXED COST
CONTRIBUTION PER UNIT (CPU)

whereas CPU is calculated
by additing fixed cost per unit and profit per unit
or
by reducing all variable cost per unit from the sale price per unit

IN YOUR CASE THE CPU IS $10-$7 = $ 3

BREAK EVEN POINT ( IN UNITS) = $ 300000/$3 OR 1,00,000 UNITS

TEST :BREAK EVEN POINT MEANS A POINT WHERE TOTAL REVENUE EQUALS TOTAL PROIFT.
NO OF UNITS: 1 LACS
SALES PRICE PER UNIT 10
VARIABLE COST PER UNIT = 7

TOTAL SALES 1 LACS * 10= 10 LACS

TOTAL VAIRABLE COST= 1 LACS * 7 = 7 LACS

TOTAL FIXED COST AS GIVEN = 3 LACS

TOTAL REVENUE = TOTAL VARIABLE COST + TOTAL FIXED COST
10 LACS = 7 LACS + 3 LACS
10 LACS = 10 LACS


BREAK EVEN POINT IN SALES VALUE = BREAK EVEN POINT IN UNITS * SALES VALUE
= 1 LAC UNITS AS CALCULATED ABOVE * $10
= 10 LACS At this the firm is in equilibrium and no profit or losses are generated by it.

Quote:

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Originally Posted by deezerdoo

Here is my question and how I tried to answer it

Assume fixed cost 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.


$300,000 divided by $10= 30,000 units
$300,000 divided by $7= 42,857.14 sales revenue

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Let me put the answer like this:

1)
Contribution per unit = Selling Price per unit - Variable cost per unit
Contribution per unit = $10 - $7
Contribution per unit = $3

2)
P/V Ratio = (Contribution per unit / Selling price per unit) * 100
P/V Ratio = ($3 / $10) * 100
P/V Ratio = 30%

Break even (Sales) = Fixed Cost / P/V Ratio
Break even (Sales) = $300,000 / 30%
Break even (Sales) = $1,000,000

Break even (Units) = Fixed cost / Contribution per unit
Break even (Units) = $300,000 / $3
Break even (Units) = 100,000 Units

Write Company has a maximum capacity of 200,000 units per year. Variable manufacturing costs are $12 per unit. Fixed overhead is $600,000 per year. Variable selling and administrative costs are $5 per unit, and fixed selling and administrative costs are $300,000 per year. The current sales price is $23 per unit.
Find the breakeven point in units and selling price?