Moyas Corporation sells a single product for $20 per unit. Last year, the company's sales revenue...

Moyas Corporation sells a single product for $20 per unit. Last year, the company's sales revenue was $300,000 and its net operating income was $16,000. If fixed expenses totaled $104,000 for the year, the break-even point in unit sales was:

Multiple Choice

9,000 units

13,000 units

15,000 units

15,800 units

Solutions

Expert Solution

Solution:

Break Even Poin in Unit Sales = Total Fixed Expenses / Contribution Margin Per Unit

To calculate Contribution Margin Per Unit, we need to calculate first the total contribution margin and then the Total Sold Units.

Contribution Margin = Net Operating INcome + Fixed Expenses = $104,000 + $16,000 = $120,000

Total Units Sold = Sales Revenue / Unit Selling PRice = $300,000 / 20 = 15,000 Units

So, the Contribution Margin Per Unit = Total COntribution Margin / Unit Sold = $120,000 / 15,000 Units = $8 per unit

So,

Break Even Poin in Unit Sales = Total Fixed Expenses $104,000 / Contribution Margin Per Unit $8 = 13,000 Units

Hence, the correct option is 13,000 Units

Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you

ekkarill92 answered 11 months ago

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