Lupin's Burgers sells gourmet hamburgers. These burgers are so good, it is the only item on the menu. In recent years, Lupin's breakeven point has been 25,000 burgers. Annual fixed cost are $250,000 and the burgers have a sales price of $15.
What is the variable cost per unit of each burger?

Question

Quizplus · Accepted Answer

Breakeven units = Fixed costs / Unit contribution Margin
Breakeven units = Fixed costs / (Selling price per unit - Variable cost per unit)
25,000 burgers = $250,000/($15 - X)
$15 - X = $250,000 / 25,000 burgers = $10
X = $5

Lupin's Burgers Sells Gourmet Hamburgers