Recovery Enterprises sells a product for $90 per unit. The variable cost is $60 per unit, while fixed costs are $45,000. Determine (a) the break-even point in sales units and (b) the break-even point if the selling price were increased to $110 per unit.
Answer:
a. 1,500 units = $45,000 ÷ ($90 – $60)
b. 900 units = $45,000 ÷ ($110 – $60)