Ramirez company sells a product for $80 per unit. the variable cost is $60 per unit, and fixed costs are $4,850,000. determine (a) the break-even point in sales units and (b) the sales units required for the company to achieve a target profit of $500,000.

Explanation:

Break Even Point (dollars) = Fixed Cost / contribution margin ratio

Break Even Point (units) = Fixed Cost / contribution margin per unit

Contribution Margin Unit = Sales Price - Variable Cost = 80 - 60 = 20

Contribution Margin Ratio = Contribution per unit / Sales Price = 20 / 80 = 0.25

Break even will be $19,400,000  or 242,500 units

Remember:

Contribution Margin will be sales minus variable cost

while the ratio is doing the contribution over the sales price

Trget profit (units) = target profit  / contribution per unit +BEP =

                                  500,000/20 + 242,500 = 267,500

or      (target profit + fixed cost)   / contribution margin per unit =

                    (4,850,000 + 500,000) / 20  =  267.500

Remember:

Target profit always must be higher than BEP (break-even point) If not, either or both are wrong, because in order to make gains, first you need to pay the fixed cost (BEP) so target profit number needs to be higher than that, always.

answer; ///usually the ( irs ) selects returns that are the most likely have errors,based on complex criteria;

of the three mortgage options that demarco and tanya have to choose from, the balloon payment mortgage would be their best option, over adjustable payment and fixed payment plans.ultimately, the balloon payment plan would save demarco and tanya overall, in interest, would cost less monthly, and they would only have to make these payments for 8 years, opposing to 30 years for adjustable or fixed payment plans. 

overall, demarco and tanya would save $80,811 if they chose balloon payments over fixed payments, and would save $116,711 if they choose balloon payments over adjustable payments. benefits with choosing fixed payments over adjustable payments is that, in the end, the payments will still be $836.30 a month, while with adjustable payments, the initial monthly payments will be $763.38 to $1082.70 a month, ultimately leading to a more costly purchase. benefits with choosing fixed payments over balloon payments are not present. benefits in choosing adjustable payments over is that it has a lower interest rate, and starts with lower monthly payments initially. benefits in choosing adjustable payments over balloon payments include a lower interest rate, and lower initial monthly payments. benefits in choosing balloon payments over fixed payments include lower interest rates, lower overall price, lower monthly payments, takes less time to pay off, and does not require a downpayment. benefits in choosing balloon payments over adjustable payments include, lower monthly payments (when averaged), takes less time to pay off, and lower overall price.

hence, option c, balloon payments, is the best option for demarco and tanya to make this purchase, for it will save them a minimum of $80811, and a maximum of $116,711.