Question

Lisa’s Custom Print Services produces and sells custom seashore prints. The manager reported $5,400 in fixed expenses, operating income of $0 at the breakeven point, and a contribution margin per unit of $50. What is the firm’s breakeven point in units using the shortcut approach?

Answer 1

Answer:

108 units

Explanation:

break even point in units = total fixed costs / contribution margin per unit = $5,400 / $50 = 108 units

There are three methods to obtaining a break even point and they all should result in the same answer: equation method, the formula method (or shortcut), and in dollar sales and sales units.

The formula method is also called the shortcut because it's the simplest way.