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Rice Company has a unit selling price of $690, variable costs per unit of $490, and fixed costs...

Question:

Rice Company has a unit selling price of $690, variable costs per unit of $490, and fixed costs of $303,200.

Compute the break-even point in units using (a) the mathematical equation and (b) unit contribution margin.

Fixed and variable costs

Fixed costs are the costs that do not change with the number of units produced or number of labor hours, whereas variable costs are the costs that change with the level of production.

Answer and Explanation: 1

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A)

Mathematical equation is

let no of units be "x" then

X * (selling price - cost price) - fixed cost=0

X*(690 - 490) = 303200

X =1516...

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How to Calculate the Break-Even Point - Definition & Formula

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Chapter 5 / Lesson 28
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See how to calculate break-even point (in units and dollars). See the variables of the break-even point formula and examples. Understand the purpose of break-even analysis.


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