Problems Gateway Appliance toasters sell for $20 per unit, and the variable cost to produce them is $15. Gateway estimates that the fixed costs are $80,000 a. Compute the break-even point in units b. Fill in the table below (in dollars) to illustrate that the break-even point has been achieved Sales - Fixed costs -total variable costs Net profit(loss) Solution: Gateway Appliance Fixed costs a. BE= Price-variable cost per unit 80000S80.000 16.000 units $20-S15$5 b. Sales $320000(16000 units x$20) fixed costs 80,000 - Total variable costs _240,000 (16,000 units $15) Net profit (loss) 0 S-161 Copyright o by The McGraw-Hill Companies. InCopyright © 2005 by The McGraw-Hill Companies, Inc. S-161 Problems 5-1. Gateway Appliance toasters sell for $20 per unit, and the variable cost to produce them is $15. Gateway estimates that the fixed costs are $80,000. a. Compute the break-even point in units. b. Fill in the table below (in dollars) to illustrate that the break-even point has been achieved. Sales _______________ –Fixed costs _______________ –total variable costs _______________ Net profit (loss) _______________ Solution: Gateway Appliance 16,000 units $5 $80,000 $20 $15 $80,000 Price - variable cost per unit Fixed costs a. BE = = − = = b. Sales $320,000 (16,000 units x $20) –Fixed costs 80,000 –Total variable costs 240,000 (16,000 units x $15) Net profit (loss) $ 0