Question 1 Brandeis, Inc. sells rhombus-shaped widgets and generates $1,000,000 in sales revenue for 2019. If...

Question 1

Brandeis, Inc. sells rhombus-shaped widgets and generates $1,000,000 in sales revenue for 2019. If profit is $195,000, variable costs per unit are $25, and sales volume is 25,000 units, then the break-even point must be:

A.
10,000 units

B.
12,000 units

C.
12,500 units

D.
15,000 units

E.
None of the above.

Expert Solution

Let us calculate fixed cost
Sales revenue		$ 10,00,000
Less:
Variable cost		$ 6,25,000
($25*25000 units)
Contribution margin		$ 3,75,000
Less: Profit		$ 1,95,000
Fixed cost		$ 1,80,000

Contribution margin per unit
sales price per unit		$ 40
($1000000/25000 units)
Less:
Variable cost per unit		$ 25
Contribution margin per unit		$ 15



Break-even Point In Unit = Fixed Cost/ Contribution Margin Per Unit

= $180000/15

=12000 units



Correct Option : B

ekkarill92 answered 2 years ago

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