Question

Sea Company sells a product with a contribution margin ratio of 50​%. Fixed costs are $ 1 comma 875 per month. What amount of sales​ (in dollars) must Sea Company have to break​ even? If each unit sells for $ 30​, how many units must be sold to break​ even? Begin by showing the formula and then entering the amounts to calculate the sales in dollars Sea must have to break even. ​(Abbreviation used: CM​ = contribution margin. Complete all input boxes. Enter a​ "0" for items with a zero​ value.) ( Fixed costs + Target profit ) / ▼ = Required sales in dollars ( 1875 + 0 ) / 50 % = 3750 Now show the formula and enter the amounts to calculate the units Sea must sell to break even. ​(Abbreviation used: CM​ = contribution margin. Round your answer to the nearest whole​ unit.) ▼ / = Required sales in units / =

Answer 1

Answer:

Break Even Point = $3,750

Break Even Point in units = $125 units

Explanation:

Break Even Point is a point where the company is at a position, where it is able to meet all its expenses, and has no loss no profit.

It is provided that the contribution margin ratio of the company = 50%

Break Even = $\frac{Fixed \ Cost}{Contribution\ Margin\ Ratio}$

As provided fixed cost = $1,875

Thus, break even point in sales expressed in dollars = $\frac{1,875}{0.5} = 3,750$

At break even point target profit = $0

It can also be calculated as ($1,875 + $0)/50%

If the selling price is $30 for each unit then the break even units = $3,750/$30 = 125 units.