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Reid Company is considering the production of a new product. The expected variable cost is $27...

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Accounting

Reid Company is considering the production of a new product. Theexpected variable cost is $27 per unit. Annual fixed costs areexpected to be $810,000. The anticipated sales price is $72each.

Determine the break-even point in units and dollars using eachof the following:

a. Use the equation method.

b. Use the contribution margin per unit approach.

c. Use the contribution margin ratio approach. (Do notround intermediate calculations. Round "Contribution margin ratio"to 1 decimal place. (i.e., .234 should be entered as23.4))

Use the equation method.

Answer & Explanation Solved by verified expert
4.3 Ratings (512 Votes)
Answer of Part a Let the Unit be X to achieve Break Even Point At Break Even Point Profit is Zero Profit Selling price X Variable cost X Fixed costs 0 72 X 27 X 810000 0 72 X 27 X 810000 810000 45 X X 810000 45 X 18000 units Break Even Point in    See Answer
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