Question

The following data are for Bernie Marie Company. Variable cost ratio 35% Number of units sold...

The following data are for Bernie Marie Company.

Variable cost ratio 35%

Number of units sold 20,000

Net income $50,000

Fixed cost $80,000

Calculate the break even number of sales units.

17,824 units

10,000 units

20,000 units

16,578 units

12,308 units

Business   Accounting   
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Homework Answers

Answer #1

Ans. Option 5th 12,308 units

Working notes:

*Calculation of total Contribution margin:

Total Contribution margin = Net income + Fixed cost

= $50,000 + $80,000

= $130,000

*Calculation of contribution margin per unit:

Contribution margin per unit = Total contribution margin / Number of units sold

= $130,000 / 20,000

= $6.50 per unit

*Calculation of break even in units:

Break even in units = Fixed cost / Contribution margin per unit

= $80,000 / $6.50

= 12,308 units

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