Asley Cash, Ltd. operates a chain of exclusive ski hat boutiques in the western United States. The stores purchase several hat styles from a single distributor at $12 each. All other costs incurred by the company are fixed. Lasley Cash, Ltd. sells the hats for $25 each. If fixed costs total $130,000 per year, what is the breakeven point in units

The break even point in units is 10000 units per year.

Explanation:

The break even point in units is the number of units that must be sold in order for the company to earn enough revenue to cover its total costs. It is a point where total revenue equals total cost and there is no profit and no loss. The break even point in units is calculated as follows,

Break even in units = Fixed costs / Contribution margin per unit

Where,

Contribution margin per unit = Selling price per unit - Variable cost per unit

Contribution margin per unit = 25 - 12 = $13 per unit

Break even in units = 130000 / 13     = 10000 units

urban company reports the following information regarding its production cost: units produced 37,000 units direct labor $ 30 per unit direct materials $ 35 per unit variable overhead $ 237,000 in total fixed overhead $ 127,000 in total