Reference: 08-01
The following is Addison Corporation's contribution format income statement for last month: $$\begin{array} { | l | c | }
\hline \text { Sales } & \$ 1,000,000 \
\hline \text { Less variable expenses } & 700,000 \
\hline \text { Contribution margin } & 300,000 \
\hline \text { Less fixed expenses } & 180,000 \
\hline \text { Net income } & \$ 120,000 \
\hline
\end{array}$$ The company has no beginning or ending inventories. A total of 20,000 units were produced and sold last month.
-What is the company's break-even point in units?

Question

Reference: 08-01
The following is Addison Corporation's contribution format income statement for last month: $$\begin{array} { | l | c | } 
\hline \text { Sales } & \$ 1,000,000 \
\hline \text { Less variable expenses } & 700,000 \
\hline \text { Contribution margin } & 300,000 \
\hline \text { Less fixed expenses } & 180,000 \
\hline \text { Net income } & \$ 120,000 \
\hline
\end{array}$$ The company has no beginning or ending inventories. A total of 20,000 units were produced and sold last month.
-What is the company's break-even point in units?

Quizplus · Accepted Answer

The break-even point in units can be calculated using the formula: Break-even point in units = Fixed expenses / (Selling price per unit - Variable cost per unit). From the given data, the contribution margin per unit is ($300,000 / 20,000 units) = $15 per unit. Fixed expenses are $180,000. Therefore, the break-even point in units = $180,000 / $15 per unit = 12,000 units.

Reference: 08-01 the Following Is Addison Corporation's Contribution Format Income

Reference: 08-01
the Following Is Addison Corporation's Contribution Format Income