Figure 8-1
The Kringel Company provides the following information: $$\begin{array} { l r }
\text { Sales (200,000 units) } & £ 500,000 \
\text { Manufacturing costs: } & \
\text { Variable } &170,000 \
\text { Fixed } & 30,000 \
\text { Selling and administrative costs: } & \
\text { Variable } & 80,000 \
\text { Fixed } & 20,000
\end{array}$$
-Refer to Figure 8-1. What is the break-even point in units for Kringel?
A)33,334 units
B)100,000 units
C)40,000 units
D)200,000 units

Question

Figure 8-1
The Kringel Company provides the following information: $$\begin{array} { l r } 
\text { Sales (200,000 units) } & £ 500,000 \
\text { Manufacturing costs: } &  \
\text { Variable } &170,000 \
\text { Fixed } & 30,000 \
\text { Selling and administrative costs: } & \
\text { Variable } & 80,000 \
\text { Fixed } & 20,000
\end{array}$$
-Refer to Figure 8-1. What is the break-even point in units for Kringel?
A)33,334 units
B)100,000 units
C)40,000 units
D)200,000 units

Quizplus · Accepted Answer

To calculate the break-even point in units, we first need to determine the contribution margin per unit. This is calculated by subtracting the variable costs per unit from the selling price per unit. The total variable costs are £170,000 (manufacturing) + £80,000 (selling and administrative) = £250,000. The selling price per unit is £500,000 / 200,000 units = £2.5 per unit. The variable cost per unit is £250,000 / 200,000 units = £1.25 per unit. Thus, the contribution margin per unit is £2.5 - £1.25 = £1.25. The total fixed costs are £30,000 (manufacturing) + £20,000 (selling and administrative) = £50,000. The break-even point in units is the total fixed costs divided by the contribution margin per unit, which is £50,000 / £1.25 = 40,000 units.

Figure 8-1 the Kringel Company Provides the Following Information -Refer to Figure 8-1

Figure 8-1
the Kringel Company Provides the Following Information -Refer to Figure 8-1