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COVID 19 Corporation sells a single product for $10 per unit. Last year, the company's sales...

COVID 19 Corporation sells a single product for $10 per unit. Last year, the company's sales revenue was $220,000 and its net operating income was $30,000. If fixed expenses totaled $80,000 for the year, the break-even point in unit sales was:
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Answer #1

Given data

Sales Revenue = $220,000

Selling price per unit = $10 per unit

Sales in units = $220,000 / $10 per unit = 22,000 units

Net operating income = $30,000

Fixed Expenses = $80,000

Contribution margin = Net operating income + Fixed Cost = $30,000 + $80,000 = $110,000

Variable cost = Sales Revenue - Contribution margin = $220,000 - $110,000 = $110,000

Variable cost per unit = $110,000 / 22,000 units = $5 per unit

Contribution per unit = Selling price per unit - Variable cost per unit = $10 - $5 = $5 per unit

Calculation of Break-even point in unit sales:

Break-even point (in units) = Fixed cost / Contribution per unit = $80,000 / $5 = 16,000 units

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