Question

Mishoe Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (1,000 units) $ 50,000 Variable expenses 32,500 Contribution margin 17,500 Fixed expenses 12,250 Net operating income $ 5,250 The break-even point in unit sales is closest to: (Round your intermediate calculations to 2 decimal places.)

Answer 1

Answer:

700 units

Explanation:

Break even point is the level of sales at which a business neither make profit nor loss.

First , we need to determine the price per unit ,variable cost per unit and the contribution margin per unit.

Price per unit = $50,000 / 1,000 = $50 per unit

Variable cost per unit = $32,500 / 1,000 = $32.5 per unit

Contribution margin per unit = $17,500 / 1,000 = $17.5 per unit.

Therefore, break even point is calculated as;

Break even point = Fixed cost / Contribution margin per unit.

Break even point = $12,250 / $17.5

Break even point = 700 units