[ajtrack84]

For the coming year, Swain Company estimates fixed costs at $90,000, the unit variable cost at $20, and the unit selling price at $80. Determine (a) the break-even point in units of sales, (b) the unit sales required to realize operating income of $150,000, and (c) the probable operating income if sales total $500,000.

[sunnyMI]

Appears to be a homework question??

[morgaine300]

a) Please note the big RED notice at the top of the page asking that homework be submitted over in the homework help section of Education. (i.e. follow the directions, just like you would for school)
b) When you get there, read the notice about submitting your own attempts to do a problem. We are not here to do your homework.

Start with learning your break even equation: Fixed Costs divided by unit contribution margin.

As an easy example: If your contribution was $5, and you had fixed costs of $15, how many would you have to sell just to cover your fixed costs? Only covering fixed costs and nothing more is the break even point. Now, if you want to profit $5, how many do you have to make?

[kwpraisegirl]

Units produced and sold 20,000
Sales $1,200,000
Variable expenses $800,000
Contribution margin $400,000
Fixed expenses $300,000
Net operating income $100,000
fixed expenses 300,000 divided by unit contribution margin 20 equals 15,000 units