Question

If a company has fixed costs of $31,469 per month and their

product that sells for $192 has a contribution margin ratio of
0.31, how many units must they sell in order to break even?

Answer 1

The company needs to sell approximately 529 units of their product to break even, given their fixed costs, selling price, and contribution margin ratio.

Step-by-step explanation:

Break-Even Analysis Calculation

To calculate the number of units a company must sell to break even when the fixed costs are $31,469 per month, the selling price is $192 per unit, and the contribution margin ratio is 0.31, we can use the following formula:

Break-Even Point (in units) = Fixed Costs / (Selling Price per Unit * Contribution Margin Ratio)

In this case, the break-even point would be calculated as follows:

Break-Even Point (in units) = $31,469 / ($192 * 0.31)

Break-Even Point (in units) = $31,469 / $59.52

Break-Even Point (in units) ≈ 529 units

Thus, the company needs to sell approximately 529 units of their product to cover their fixed costs and break even for the month.