Mitchell company sells its product for $100 per unit. the company's accountant provided the following cost information: manufacturing costs $25,000 + 45% of salesselling costs $15,000 + 20% of salesadministrative costs $25,000 + 10% of sales what is the company's break-even point in units?

Break-even point= 2600 units

Explanation:

The break-even point refers to the units necessary to cover a company's total amount of fixed and variable expenses during a specified period of time.

The formula to calculate the break-even point is the following:

break-even point= fixed costs/contribution margin

Contribution Margin: The contribution margin is a product's price minus all associated variable costs (sales- variable costs), resulting in the incremental profit earned for each unit sold.

Fixed costs: A fixed cost is a cost that does not change with an increase or decrease in the amount of goods or services produced or sold.

In this case:

Contribution margin= $100 - (45+20+10)= $25

Fixed Costs= 25000+15000+25000= $65000

Break-even point= 65000/25= 2600 units

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