1. Russ Company sold 600 units of smartphones in 2020. Each product has a variable cost of $100 and was sold at $400. The company’s fixed cost was $15,000. In 2021, the company projected a net profit of $175,800. Using the contribution margin technique: a. How many units does the company need to sell in 2020 to reach their break even point? b. How many sales in dollars does the company need in 2020 to reach their break even point? c. How many units does the company need to sell in 2021 to reach their targeted income?
1. Russ Company sold 600 units of smartphones in 2020. Each product has a variable cost of $100 and was sold at $400. The company’s fixed cost was $15,000. In 2021, the company projected a net profit of $175,800.
Using the contribution margin technique:
a. How many units does the company need to sell in 2020 to reach their break even
point?
b. How many sales in dollars does the company need in 2020 to reach their break
even point?
c. How many units does the company need to sell in 2021 to reach their targeted
income?
d. How many sales in dollars does the company need in 2021 to reach their
targeted income?
Break Even Point is the point where the firm is in a situation of no profit and no loss.
At the break even point the firm is able to cover only the variable costs in short run.
At the break even point the firm is able to cover both fixed and variable costs in long run.
Learn your way
Includes step-by-step video
Step by step
Solved in 4 steps
