Exhibit 6-1
Larimer Company has monthly fixed costs totaling $90,000 and variable costs of $5 per unit.Each unit of product is sold for $20.
-Refer to Exhibit 6-1.What is the break-even point in units?
A)3,600
B)6,000
C)4,500
D)18,000
E)None of the answer choices is correct.

Question

Quizplus · Accepted Answer

The break-even point in units is calculated by dividing the total fixed costs by the contribution margin per unit. The contribution margin per unit is the selling price per unit minus the variable cost per unit, which is $20 - $5 = $15. Therefore, the break-even point is $90,000 / $15 = 6,000 units.

Exhibit 6-1 Larimer Company Has Monthly Fixed Costs Totaling $90,000 and Variable