[ewalton1970]

I know how to compute BE in dollars and in units. But I have a peculiar question that I just cannot grasp what to do. It's giving me a fixed cost, a contribution margin ratio in %, and sales price; and it wants me to compute break-even point in units. I'm kind of confused because I would think I'd need the variable cost before I could even try to figure this out. The problem with out giving the actual figures (don't want to cheat, just want to figure this out) reads; If fixed cost are $$$ and the contribution margin ratio is %% for a product that sells for $$, what is the break-even point in units?

[CaptainForest]

To simplifier this, I will make up some numbers.

Given:
Fixed Costs $400,000
Selling Price $100 per unit
CM % = 40%

What is BE in units?

Solution:
Selling 100
VC = ?
CM = .40 x $100 = 40
Less: FC 400,000
Net Income = 0

Therefore, BC is:
40x – 400,000 = 0
40x = 400,000
x = 10,000

[ewalton1970]

Thank you so much Captian Forrest. Very helpful indeed. Wish I was more of a math person.