Last year, Perry Company reported profits of $4,200. Its variable expenses totalled $66,000 or $6 per unit. The unit contribution margin was $3.00. The break-even point in units for Perry Company is:

Question

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The break-even point in units is calculated by dividing the fixed costs by the unit contribution margin. Given that the unit contribution margin is $3.00 and the total variable expenses are $66,000 at $6 per unit, we can calculate the fixed costs by subtracting the total variable expenses from the profits: $4,200 (profit) = Total Sales - $66,000 (variable expenses). However, to find the fixed costs directly from the given information, we need to understand that the profit equation is Profit = (Sales - Variable Expenses) - Fixed Costs. Since we are looking for the break-even point, we set the profit to $0 and solve for fixed costs indirectly through the contribution margin method. The total variable expenses and the unit contribution margin allow us to calculate the number of units sold, but without the direct fixed costs or total sales value, we proceed by understanding that the break-even point in units = Fixed Costs / Unit Contribution Margin. Given the data, we can deduce that the sales were enough to cover $66,000 in variable costs at $6 per unit, plus $4,200 in profit, with a $3 contribution margin per unit. To find the break-even point, we divide the total fixed costs (not directly provided but implied to be covered in the scenario) by the unit contribution margin. Since the exact fixed costs are not directly given, the calculation of the break-even point directly from the provided information involves understanding that the number of units sold at a $3 contribution margin to cover the fixed costs and variable costs exactly (without making a profit or loss) is the essence of the break-even analysis. The correct calculation involves understanding the relationship between these variables and applying the formula correctly, which leads to the correct answer of 9,600 units based on the information given and typical break-even analysis formulas.

Last Year, Perry Company Reported Profits of $4,200