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Homework answers / question archive / Lowell Inc
Lowell Inc. is analyzing its cost structure. Its fixed operating costs are $300,000, its variable costs of $3.30 per unit produced, and its products sell for $4.00 per unit. What is the company's breakeven point, i.e., at what unit sales volume would income equal costs?
Computation of Breakeven Point:
Breakeven Point = Fixed Costs/Contribution Margin
Here,
Fixed Costs = $300,000
Contribution Margin Rati = Sales price per unit - Variable cost per unit
= $4-$3.30
Contribution Margin = $0.7
Breakeven Point = $300,000/0.7 = 428,571.43 or 428,571 units
