question archive Phan Incorporated has annual fixed costs totaling $6,000,000 and variable costs of $350 per unit
Phan Incorporated has annual fixed costs totaling $6,000,000 and variable costs of $350 per unit
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Phan Incorporated has annual fixed costs totaling $6,000,000 and variable costs of $350 per unit. Each unit of product is sold for $500.
Required:
a. Calculate the contribution margin per unit.
b. Find the break-even point in units.
c. How many units must be sold to earn an annual profit of $750,000?
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a)Contribution Margin per Unit
Contribution per unit= Sale per unit-Variable cost per unit=$500-$350=$150 per unit
b) Break even points in unit
Fixed cost /Contribution per unit = $600000/$150= 4000 unit
c) How many units must be sold to earn an annual profit of $750,000.
Contribution =Fixed cost +Desired Profit
= $600000+$750000=$1350000
Number of unit=Total Contribution/Contribution Per Unit= $1350000/$150=9000 unit.
