Question

Sufra Corporation is planning to sell 100,000 units for $3.20 per unit and will break even at this level of sales. Fixed expenses will be $111,000. What are the company's variable expenses per unit

Answer 1

Answer:

$2.09 per unit

Explanation:

The computation of variable expenses per unit is shown below:-

Let variable costs be $x

Contribution margin per unit = Sales - Variable costs

= $3.20 - x

At break-even,units = Fixed costs ÷ Contribution margin

100,000 = $111,000 ÷ ($3.20 - x )

100,000 × ($3.20 - x ) = $111,000

$320,000 - 100,000x = $111,000

($320,000 - $111,000) ÷ 100,000 = x

$209,000 ÷ 100,000 = x

x = $2.09 per unit