Use the following information to determine the break-even point in units (rounde
ID: 2514081 • Letter: U
Question
Use the following information to determine the break-even point in units (rounded to the nearest whole unit): Unit sales 53,000 Units Unit selling price $14.65 Unit variable cost $7.80 Fixed costs $189,000 12,901 27,591 8,419 46,545 24,231
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The following information is available for a company's cost of sales over the last five months. Month Units sold Cost of sales January 420 $31,800 February 820 $38,000 March 1,700 $50,000 April 2,500 $62,000 Using the high-low method, the estimated variable cost of sales per unit sold is: $24.80. $75.71. $32.12. $14.52. $29.41
Explanation / Answer
1.Contribution margin=(Sales-Variable costs)
=(14.65-7.80)=$6.85
Hence breakeven=fixed cost/Contribution margin
=(189000/6.85)=27591 (Approx)
2.Variable cost per unit=[Total cost at highest level-Total cost at lowest level]/(Highest level-Lowest level)
=(62000-31800)/(2500-420)=$14.52(Approx).