To find the break-even point in units, we use the formula:

$\text{Break-even point in units} = \frac{\text{Fixed Costs}}{\text{Selling Price per Unit} - \text{Variable Cost per Unit}}$

Step 1: Calculate the Variable Cost per Unit

At the break-even point, the total variable costs are $11,800, and let’s denote the number of units as $x$.

$\text{Variable Cost per Unit} = \frac{11,800}{x}$

Step 2: Set up the Break-Even Equation

The total revenue at the break-even point equals total costs:

$35x = 12,700 + 11,800$

$35x = 24,500$

$x = \frac{24,500}{35}$

$x = 700$

Conclusion

The number of units required to break even is 700.

Would you like further details or clarifications? Here are some related questions:

1. What happens to the break-even point if the selling price increases?
2. How would a decrease in fixed costs affect the break-even analysis?
3. What role does contribution margin play in break-even calculations?
4. How do changes in variable costs impact break-even units?
5. Can the break-even point be used to assess profitability targets?

Tip: Always analyze both fixed and variable costs when planning to adjust pricing strategies.