Question

Last year, Twins Company reported $750,000 in sales (25,000 units) and a net operating income of $25,000. At the break-even point, the company's total contribution margin equals $500,000. Based on this information, the company's:________A. Contribution margin ratio is 40%.B. Break-even point is 24,000 units.C. Variable expense per unit is $9.D. Variable expenses are 60% of sales.

Answer 1

Answer:

Variable Cost per unit = $9 per unit

so correct option is C. Variable expense per unit is $9

Explanation:

given data

sales = 25,000 units

Company reported sale = $750,000

net operating income = $25,000

total contribution margin = $500000

top find out

Based on information the company reported

solution

we know that here contribution at the break even point is  500000

so that the fixed cost will be 500000 because break even point

fixed cost = contribution and net income is 0

by this data we find the variable expense that is

variable expenses = Company reported Sales  - Fixed Cost - Net Operating Income    ..........................1

variable expenses =  $750,000 - $500000 - $25000

variable expenses = $225000

and Variable Cost per unit = $\frac{225000}{25000}$

Variable Cost per unit = $9 per unit

so correct option is C. Variable expense per unit is $9