Question

Company sells a nature guide. The following information was reported for a typical month: Total Per Unit Sales $ 17,600 $ 16.00 Variable expenses 9,680 Contribution margin 7,920 Fixed expenses 3,600 Net operating income $ 4,320 What is Bear's current break-even point in unit and dollars

Answer 1

Answer:

500 units and $8,000

Explanation:

The computation is shown below:

Break even point in units

= Fixed cost ÷ Contribution margin per unit

= ($3,600) ÷ ($7,920 ÷ ($17,600 ÷ $16)

= ($3,600) ÷ ($7.2)

= 500 units

Now the break even point in dollars is

= Fixed cost ÷ Contribution margin ratio

= ($3,600) ÷ ($7.2 ÷ $16)

= $3,600 ÷ 0.45

= $8,000

We simply applied the above formula and the same is to be considered