April industries sells a product with a contribution margin of $12 per unit, fixed costs of $223,200, and sales for the current year of $300,000. how much is april's break-even point?
The breaking point of April Industries is 18600 units. We can know this by using the formula: Break-even point = fixed costs ÷ contribution margin When you replace the data you get the following:
Break even point = 223200 (which is the fixed costs)/ 12 (the contribution margin) After doing the maths you get Break even point = 18600 Break even point in this case is measured by units and not money because the break even point is the point at which total revenue equals total costs or expenses. At this point there is no profit or loss - in other words, you 'break even'.
