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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 expe). Total fixed cost equals $78,000 (includes fixed factory overhead and fixed selling and administrative expense) Required: 1. Calculate the break-even pairs of shoes. 2,000 Feedback 2. Check your answer by preparing a contribution margin income statement based on the break-even units. Enter all amounts as a positive number. Chillmax Company Contribution Margin Income Statement At Break-Even Point Total Sales Total variable cost Total contribution margin Total fixed cost Operating income

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Answer:

The break-even point in units is 2000 while the break-even point in dollar terms is 2000*$60=$120000

Explanation:

Break-even point is the point at which Units Chillmax Company makes no gain no loss on its sale.It is at that output level where total revenue equals total costs(fixed and variable)

Break-even point in units =Fixed costs/contribution margin

Where contribution margin =sales-variable expenses

In this case contribution is =$60-$21=$39

Break-even point in units=$78000/$39=2000 units

Find attached spreadsheet containing the break-even income statement.

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