Answered: Zhao Company has fixed costs of…

Zhao Company has fixed costs of $429,000. Its single product sells for $187 per unit, and variable costs are $122 per unit. Determine the break-even point in units. Break-even point units

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Zhao Company has fixed costs of $429,000. Its single product sells for $187 per unit, and variable costs are $122 per unit. Determine
the break-even point in units.
Break-even point
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Expert Solution

Step 1 Introduction

Break Even Point (BEP) :— It is the point of production where total cost is equal to total revenue. At this point, profit is equal to zero.

BEP in units = Fixed Cost/Contribution Margin per unit

BEP in sales = BEP in units × Selling Price per unit

Contribution Margin:— It is the difference between sales revenue and variable cost.

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