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(Solved): Break-Even Point in UnitsChillmax Company plans to sell 3,500 pairs of shoes at $60 each in the comi ...

Break-Even Point in Units

Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year. Unit variable cost is $21 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $78,000 (includes fixed factory overhead and fixed selling and administrative expense).


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1. Calculate the break-even pairs of shoes.

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At the break-even point, operating income equals $0. The break-even point tells managers how many units must be sold to cover all costs. Once more than the break-even units are sold, the company begins to earn a profit. So to get the break-even units using the operating income statement, we set operating income to zero, and then solve for the number of units.

Break-Even Units = Total Fixed Cost
(Price ? Variable cost per unit)

Review the "How to Calculate the Break-Even Point in Units" example in your text.

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2. Check your answer by preparing a contribution margin income statement based on the break-even units. Enter all amounts as a positive number.

Sales$fill in the blank 28df3df7602bfe9_1blankblank
Total variable costfill in the blank 28df3df7602bfe9_2blankblank
Total contribution margin$fill in the blank 28df3df7602bfe9_3blankblank
Total fixed costfill in the blank 28df3df7602bfe9_4
Operating income$fill in the blank 28df3df7602bfe9_5blankblank

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