Question

Moyas Corporation sells a single product for $10 per unit. Last year, the company's sales revenue was $200,000 and its net operating income was $8,000. If fixed expenses totaled $72,000 for the year, the break-even point in unit sales was:

Answer 1

Answer:

Break-even point in units= 18,000 units

Explanation:

Giving the following information:

Selling price= $10

Fixed costs= $72,000

Sales= 200,000

Net income= 8,000

First, we need to calculate the unitary contribution margin.

Sales in units= 200,000/10= 20,000 units

Total contribution margin= net income + fixed costs

Total contribution margin= 8,000 + 72,000= $80,000

Unitary contribution margin= 80,000/20,000= $4

Now, using the following formula, the break-even point in units.

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units=  72,000/4

Break-even point in units= 18,000 units