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Wacker Inc
Wacker Inc. sells a single product. The product sells for $30 per unit. The variable costs, including product and shipping costs, are $18 per unit. Total fixed costs for the company are $60,000. Compute the break-even point in dollars and units.
Expert Solution
Computation of the break even point in units:-
Contribution margin per unit = Selling price per unit - Variable cost per unit
= $30 - $18
= $12 per unit
Break even point in units = Fixed costs / Contribution margin per unit
= $60,000 / $12
= 5,000 units
Computation of the break even point in dollars:-
Contribution margin ratio = Contribution margin per unit / Selling price per unit
= $12 / $30
= 40%
Break even point in dollars = Fixed costs / Contribution margin ratio
= $60,000 / 40%
= $150,000
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