Determining the break-even point and preparing a break-even graph Executive officers of Vaclar Company are assessing the profitability of a potential new product. They expect that the variable cost of making the product will be $54 per unit and fixed manufacturing cost will be $720,000. The executive officers plan to sell the product for $72 per unit.
Required
Determine the break-even point in units and dollars using each of the following approaches:
a. Contribution margin per unit.
b. Equation method.
c. Contribution margin ratio.
d. Prepare a break-even graph to illustrate the cost-volume-profit relationships.