Break-Even Point and Target Income
Response to the following problem:
Detienne Company manufactures and sells one product for $10 per unit. The unit contribution margin is 30% of the sales price, and fixed costs total $90,000.
1. Using the equation approach, compute:
a. The break-even point in sales dollars and units.
b. The sales volume (in units) needed to generate a profit of $30,000.
c. The break-even point (in units) if variable costs increase to 80% of the sales price and fixed costs increase to $100,000.
2. See if you can recompute the solutions to 1(a), 1(b), and 1(c) in one equation step using either the contribution margin ratio or the contribution margin dollars per unit.