Question

SBD Phone Company sells its waterproof phone case for \(90 per unit. Fixed costs total \)162,000, and variable costs are $36 per unit. Determine the (1) contribution margin per unit and (2) break-even point in units.

Short answer

Answer

Contribution margin per unit:$54.

Break-even point: 3,000 units.

Step-by-step solution

Step-By-Step SolutionStep 1: Definition of Break-Even Point

The level or point at which the business entity is in the situation, whether it neither generated profit nor loss, and we can also say a level where the total cost is equal to the total revenue, is known as the break-even point.

Contribution margin per unit

Particular	Amount
Sales price per unit	$90
Less: Variable cost per unit	(36)
Contribution margin per unit	$54

Break-even point

$$\begin{gathered} Break-evenpoint=\frac{Fixed\cos t}{Contributionmarginperunit} \\ =\frac{\$162,000}{\$54} \\ =3,000units \end{gathered}$$