Question

Trailblazer Company sells a product for $210 per unit. The variable cost is $105 per unit, and fixed costs are $588,000. Determine (a) the break-even point in sales units and (b) the sales units required for the company to achieve a target profit of $223,440.

Answer 1

Instructions are below.

Step-by-step explanation:

Giving the following information:

Trailblazer Company sells a product for $210 per unit. The variable cost is $105 per unit, and fixed costs are $588,000.

To calculate the break-even point in units, we need to use the following formula:

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 588,000/ (210 - 105)

Break-even point in units= 5,600 units

Desired profit= 223,440

Break-even point in units= (fixed costs + desired profit) / contribution margin per unit

Break-even point in units= (588,000 + 223,440) / 105

Break-even point in units= 7,728 units