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Compute the break-even point using the following income statement data: Revenue (20,000 units) $6,800,000 Variable costs...

Compute the break-even point using the following income statement data: Revenue (20,000 units) $6,800,000 Variable costs 2,800,000 Fixed costs 2,500,000. 33,332 units, 7500 units, 11,628 units, or 12,500 units

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Answer #1

The correct answer is 12500 units.

The break even point in units

Fixed cost ÷ contribution per unit

Fixed cost= $2,500,000

Contribution per unit= sales price per unit - variable cost per unit

Sales price per unit= Total sales value ÷ Total sales unit

$6,800,000÷ 20000 units = $340 per unit

Variable cost per unit= total variable cost ÷ total units

$2,800,000 ÷ 20000 units = $140 per unit

Contribution per unit = $340 - $140 =$ 200 per unit

Break even point sales=$ 2,500,000 ÷$ 200= 12500 units

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