Question

Moyas Corporation sells a single product for $20 per unit. Last year, the company's sales revenue...

Moyas Corporation sells a single product for $20 per unit. Last year, the company's sales revenue was $285,000 and its net operating income was $45,500. If fixed expenses totaled $97,000 for the year, the break-even point in unit sales was:

Multiple Choice

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14,250 units

7,125 units

16,525 units

9,700 units

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Business   Accounting   
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Answer #1
Answer: d. 9,700 units
Calculation of break even point in unit is as follows:
Break even point in units = Fixed expenses / Contribution margin per unit
= $ 97,000 / $ 10
= 9,700 units
Thus, Break even point is 9,700 units
Working note:
Calculation of Contribution margin per unit :
Contribution margin per unit = Total contribution margin / Number of unit sold
= $ 142,500 / 14,250
= $ 10 per unit
Operating income = Total contribution margin - Fixed expenses
Thus, Total contribution margin = Operating income + Fixed expenses
= $ 45,500 + $ 97,000
= $ 142,500
Number of unit sold = Total sales / Selling price per unit
= $ 285,000 / $ 20
= 14,250 units
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