A maker of computer games expects to sell 475,000 games at a price of $48 per game. These units cost $10 to produce. Selling, general, and administrative expenses are $1.0 million and depreciation is $280,000. What is the EBIT break-even point for the number of games sold in this case
2 answers
Question:
A maker of computer games expects to sell 475,000 games at a price of $48 per game. These units cost $10 to produce. Selling, general, and administrative expenses are $1.0 million and depreciation is $280,000. What is the EBIT break-even point for the number of games sold in this case
Answers
Answer:The answer is $33, 684 Explanation:The formula for calculating EBIT break point is (Units Sold × Sale Price) - (Units Sold × Cost per unit) - SG&A - Depreciation Going by the information given in the question, the EBIT break point is $33, 684
Answer: The correct answer is $33,684Explanation: Break evn point is the point where both the revenue generated from sales and the expenses incurred are equal. It is a point where neither gain or loss is made.In calcualting EBIT breakeven poimt for the number of games sold, (SG&A + depreciation expense)/ sales per unit - cost per unit= (1000000 + 280000)/ 48 - 10= 1280000/ 38= $33,684
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