Break even calculation units

MCI Factory requires information on many units the need to produce to break even. Please use the following information for the calculations:

• Fixed costs $250,000
• Sale price per unit $56
• Variable costs per unit $45

Break even formula

Fixed costs/contribution margin

(Contribution margin=sales-variable costs)

Please use the example below to assist you with this task:

Example:

Factory A is producing units of product B. Management want to know how many units of product B are required to break even.

Fixed costs $180,000

Contribution margin per unit of B (Sale price $15-variable costs$10) = $5 per unit.

Number of units in B to be produced to break even is: $180,000/$5 = 36,000 units.