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Calculation of Break even volume in units.
Generators, Inc. produced emergency backup generators for use in large commercial buildings. The costs of manufacturing and marketing the generators at the company's normal volume of 3,000 units per month are shown in Exhibit 1.
Exhibit 1 Costs per Unit for Generators
Unit Manufacturing costs:
Variable Materials
1000
Variable Labor
1500
Variable Overhead
500
Fixed Overhead
1200
Total Manufacturing Cost
4200
Unit Marketing Costs:
Variable
Fixed
1400
Total Marketing Cost
1900
Total Unit Cost:
6100
The following questions refer only to the data given above. Unless otherwise stated, assume there is no connection between situations described in each of the questions, each is to be treated independently. Unless otherwise stated, a regular selling price of $7,400 per unit should be assumed. Ignore income taxes and other costs that are not mentioned in Exhibit 1 or in the question itself.
What is the break-even volume in units? In sales dollars?
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