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23 December, 16:29

A manufacturing process has a fixed cost of $250,000 per month. Each unit of product being produced contains $15 worth of material and $35 in labor. Each finished product will sell for $100. How many units must be sold each month to break even?

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  1. 23 December, 16:42
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    500,000 units

    Explanation:

    BEP = fixed asset / CMR

    CMR = contribution / sales

    contribution = 100 - (15 + 35)

    = $50

    CMR = $50 / $100

    = 0.5

    BEP = $250000 / 0.5

    = 500,000 units
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