Engineering Board Exam Reviewer · Break-Even Analysis · medium

A product sells for P120 with a variable cost of P70 per unit. Fixed costs are P500,000. How many units must be sold to earn a profit equal to 20% of sales?

  1. 10,000 units
  2. 19,230.77 units
  3. 6,756.76 units
  4. 25,000 units

Answer

B. 19,230.77 units

Solution

Profit =0.20(120x): (120-70)x-500,000=24x 26x=500,000 x=19,230.77 units.

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