Sufra Corporation is planning to sell 100,000 units for $8.00 per unit and will break even at this level of sales. Fixed expenses will be $300,000. What are the company's variable expenses per unit?

Question

Quizplus · Accepted Answer

To break even, total revenue must equal total costs (fixed + variable). Revenue at break-even is 100,000 units * $8 = $800,000. Fixed expenses are $300,000, so variable expenses must be $800,000 - $300,000 = $500,000. Dividing $500,000 by 100,000 units gives $5.00 per unit.

Sufra Corporation Is Planning to Sell 100,000 Units for $8