- Greshak Corp. produces and sells high-end entertainment systems. Its average selling price is currently $3,200 per system. Based on a review of its projected financial statements, the company’s variable costs are $1,200 per unit sold and total fixed costs are $10,000,000. Based on this information, solve the following:
- A. Greshak’s breakeven point in units?
- B. Greshak’s breakeven in US dollars?
- C. Greshak’s unit sales target if the company wants to make a profit of $3,500,000?
We have been provided with the information as follow
| Particular | Amount in $ |
| Seeling Price | $3,200 |
| Less: | |
| Variable Cost | 1200 |
| Contribution Margin | $2,000 |
Fixed Cost= $ 10,000,000
- A. Greshak’s breakeven point in units?
BEp=Fixed Cost /Contribution Margin Per Unit
=
| Fixed Cost | 10,000,000 |
| Contribution Margin | 2000 |
| BEP | 5000 |
BEp= 5000 units
- B. Greshak’s breakeven in US dollars?
= Contribution Margin Per Unitin $ x BEP Sales
=2000 x 5000
=$ 10,000,000
- C. Greshak’s unit sales target if the company wants to make a profit of $3,500,000?
Sales Target= Fixed Cost+ Targeted Profit/ Contribution Margin Per Unit
=10,000,000+3,500,000 /2000
= 6750 Units
