Question

In: Accounting

At a level of 28,600 units sold, Gail Corp. has sales of $715,000, a contribution margin...

At a level of 28,600 units sold, Gail Corp. has sales of $715,000, a contribution margin ratio of 45%, and a profit of $147,375. What is the break-even point in units?

28,600

15,500

12,870

16,870

Expert Solution

Break even point in units = Fixed Cost / Unit contribution margin

= 174375 / 11.25

= 15500 units ( ANSWER )

Working Note 1

Contribution = Total Sales * Contribution margin ratio

= $715000 * 45%

= $ 321750

Working Note 2

Unit Contribution margin = Total Contribution/ Units Sold

= $ 321750 /28600

= $ $ 11.25 per unit

Working Note 3

Fixed Cost = Total Contribution - Profit

= 321750 - 147375

= $ 174375

ekkarill92 answered 1 year ago

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