Question

Moyas Corporation sells a single product for $25 per unit. Last year, the company's sales revenue was $315,000 and its net operating income was $63,250. If fixed expenses totaled $110,000 for the year, the break-even point in unit sales was: Multiple Choice 5,670 units 12,600 units 8,000 units 15,130 units

Answer 1

Answer:

8,000 units

Explanation:

Fixed Cost = $110,000

Selling Price = $25 per unit

Variable Cost = Revenue - Net Income - Fixed Cost

Variable Cost = $315,000 - $63,250 - $110,000

Variable Cost = $141,750

Contribution Margin = Sales - Variable Expenses

Contribution Margin = $315,000 - $141,750

Contribution Margin = $173,250

Contribution Margin Ratio = Contribution Margin / Sales

Contribution Margin Ratio = $173,250 / $315,000

Contribution Margin Ratio = 0.55

Break-even point (in dollars) = Fixed Cost / Contribution Margin Ratio

Break-even point (in dollars) = $110,000 / 0.55

Break-even point (in dollars) = $200,000

Break-even point (in units) = $200,000 / $25

Break-even point (in units) = 8,000 units