Ichi Corp. produces a single product and projects the following costs for a normal month in which 50 units are produced and sold: $$\begin{array} { l c c }
& \text { Manufacturing } & \text { Nonmanufacturing } \
\cline { 2 - 3 } \text { Fixed costs } & \$ 8,000 & \$ 5,000 \
\text { Total variable costs } & 7,700 & 6,050
\end{array}$$ The selling price per unit is $400. What volume, in units, must Ichi sell to break even?
A) 40
B) 104
C) 53
D) 90

Question

Ichi Corp. produces a single product and projects the following costs for a normal month in which 50 units are produced and sold: $$\begin{array} { l c c } 
& \text { Manufacturing } & \text { Nonmanufacturing } \
\cline { 2 - 3 } \text { Fixed costs } & \$ 8,000 & \$ 5,000 \
\text { Total variable costs } & 7,700 & 6,050
\end{array}$$ The selling price per unit is $400. What volume, in units, must Ichi sell to break even?
A) 40
B) 104
C) 53
D) 90

Quizplus · Accepted Answer

Explanation:Break-even point in units = Fixed costs / (Selling price per unit - Variable cost per unit)= (8,000 + 5,000) / (400 - (7,700 + 6,050) / 50)= 13,000 / (400 - 273)= 13,000 / 127= 102.36 (rounded up to 104 units)

Ichi Corp Produces a Single Product and Projects the Following Costs