Jerry is considering buying a company if it will break even or earn net income on revenues of $80,000 per month. The company that Jerry is considering sells each unit it produces for $5. Use the following cost data to compute the variable cost per unit and the fixed cost for the period. Calculate the break-even point in sales dollars. Should Jerry purchase this company?
HINT: Total costs include both variable and fixed portion, so it is necessary to break down total costs into variable and fixed before computing break-even.
Show the analysis in a table format. Can you provide a short summary of what you may gain from this information?