Break-Even = Fixed Cost / (1-Varibale Cost%).

You just started a new company that sells product X, and have the following data:

Fixed Costs= $340,000 which includes $50,000 for your compensation

Variable Costs per unit of product X = $49.87

Unit price of product X sold = $73.33

• How many units of product X must you sell to break even?
• If you want to give yourself a $30,000 raise next year, how many units of product X do you have to sell?
• What is the effect on profit if you spend $60,000 on a site manager who will help you reduce your variable cost percentage by 5% at the same level as last year? (Assume 20,000 units sold)