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The equation representing the total weekly costs (TC) in $ for an organization is as follows:
TC= 525,000+35QWhere Q represents the weekly production and sales in units. The organization’s contribution to sales ratio is 30%.
What is the weekly breakeven point (in units)?Please do not simply set me a question – say what you problem is!
(I assume that the book in which you found the question also has the answer, so there is not much point in me simply saying that the answer is 35,000 units!!)You know what the fixed costs are (525,000).
You know what the variable costs are (35 per unit) and that therefore the contribution per unit is 35 x 30/70 = 15 per unitSo the breakeven units must be 525,000/15
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