Question

Moyas Corporation sells a single product for $10 per unit. Last year, the company's sales revenue was $310,000 and its net operating income was $47,000. If fixed expenses totaled $108,000 for the year, the break-even point in unit sales was:

Answer 1

If fixed expenses totaled $108,000 for the year, the break-even point in unit sales was:21, 600 Units

Explanation:

The Break Even Point in units is 21,600units.

We follow the below  steps in order to arrive at the answer:

First we find Total variable costs of Moyas Corporation

Net operating income=Sales-variable cost-Fixed cost

47000=310000-variable cost-108000

Variable cost=310000-108000-47000

Variable Cost=155000

Next we find the number of units sold

No:of unit sold= Total Sales/Selling price per unit

No:of unit sold =310000/10=31,000

Then we find Variable Cost per unit

Variable cost per unit=Total Variable cost/Number of unit sold

Variable cost per unit=155000/31000=5

We calculate Contribution Margin per unit

Contribution Margin per unit =Selling price per unit-Variable cost per unit

Contribution Margin per unit = 10-5= 5

Finally we calculate Break Even Point (BEP) in units as:

BEP=Fixed cost per unit/Contribution Margin per unit

BEP=108,000/5=21600 Units