Question

Hsu, Inc. sells a single product for $12. Variable costs are $8 per unit and fixed costs total $360,000 at a volume level of 60,000 units. Assuming that fixed costs do not change, Hsu’s break-even point would be: a positive amount other than the specific amounts given. 90,000 units. 45,000 units. negative because the company loses $2 on every unit sold. 30,000 units.

Answer 1

Answer:

$90,000

Explanation:

Under the Cost Volume Profit analysis, CVP, the break-even point is calculated by dividing fixed costs by the contribution margin per unit.

For HSU, Inc. contribution margin will be the selling price - variable costs.

=$12- $8

= $4

Variable cost per unit is $4

Fixed costs are $360,000

the break-even point will be fixed cost divided by contribution margin

=$360,000 / $4

=$90,000