Sales ( 30,000 caps @ $50)- 1,500,000 Less vairable expenses- 900000 contribution margin- 600000 less fixed expenses- 280000 net income- 320000 Find the contribution margin and the break even point in both units and dollars

Economics Sep 04, 2020

Sales ( 30,000 caps @ $50)- 1,500,000
Less vairable expenses- 900000
contribution margin- 600000
less fixed expenses- 280000
net income- 320000

Find the contribution margin and the break even point in both units and dollars.

Expert Solution

Contribution margin = Sales - Less variable expenses = 1,500,000 - 900,000 = 600,000
Then the unit contribution margin = 600,000/30,000 = $20
break even unit = fixed expenses / unit contribution margin = 280,000/20 = 14,000 caps
break even dollars = break even unit * price = 14,000 * 50 = 700,000

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