Friday, December 16, 2011

How many units must be sold in order to break even?

Jet boats: sales price per unit $8000 variable cost per unit $4800


Ski boats: sales price per unit $20000 variable cost per unit $14000


Annual fixed costs $280000


Jackson sells 5 jet boats for every 2 ski boats sold|||for every combo 5 jet boats + 2 ski boats,


contribution towards fixed costs = 5(8000-4800) + 2(20000-14000)= 28000


so break even point = 280000/28000 = 10 combos,ie


50 jet boats + 20 ski jets


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