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Senbet Ventures is considering starting a new company to produce stereos. The sales price would be set at 1.5 times the variable cost per unit. The Variable Cost per unit is estimated to be $2.50. The total fixed costs are estimated at $126,000. How many stereos would the company be required to sell in order to make a profit of $150,000

Answer :

Answer:

the break even point in units in order to make a profit is 220,800 units

Explanation:

The computation of the break even point in units in order to make a profit  is shown below:

Break even point in units is

= (Fixed cost + profit) ÷ (Selling price per unit - variable cost per unit)

= ($126,000 + $150,000) ÷ ($2.50 × 1.5 - $2.50)

= $276,000 ÷ ($3.75 - $2.50)

= 220,800 units

hence, the break even point in units in order to make a profit is 220,800 units

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