The break-even point in sales dollars for the product, based on the cost and the variable costs is $1, 080, 000
To find the break - even point in sales dollars, one first needs to find the break - even point in units.
The break - even point in units is calaulted as:
= Fixed assets / Contribution margin
In this case, the contribution margin is found by the formula:
= Sales per unit x ( 1 - Variable cost percentage)
= 275 x ( 1 - 68%)
= $88
The break - even point in units is:
= 345, 600 / 88
= 3, 927.27 units
The break - even point in sales dollars is:
= Breakeven point in units x Selling price per unit
= 3, 927.27 x 275
= $1,080,000
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