Question

Steeler Corporation is planning to sell 100,000 units for $2.00 per unit and will break even at this level of sales. Fixed expenses will be $75,000. What are the company's variable expenses per unit? Group of answer choices $1.00 $1.10 $1.25 $0.75

Answer 1

The company's variable expenses per unit is 1.25

What is breakeven?

Breakeven is a point at which neither profit nor loss is made. It is used to determine the number of units or dollars of revenue needed to cover total costs.

Number of units to sell = 100,000

Price per unit = 2

Fixed expense = 75000

At break even point :

Revenue = total expenses

Total expenses

= fixed cost + variable cost

Let variable cost = x

Revenue

= units to sell * price per unit

Revenue

= 100,000 * 2

= 200,000

Hence,

Fixed cost + variable cost = Revenue

75000 + x = 200,000

x = 200, 000 - 75000

x = 125,000

Variable cost = 125,000

The variable expense per unit is thus :

Variable expense / number of units

= 125,000 / 100,000

= 1.25 per unit

Hence, the company's variable expenses per unit is 1.25

Learn more about break even here: brainly.com/question/9212451