At a volume of 20,000 units, Almount Industries reported sales revenues of $1,000,000, variable costs of $300,000, and ﬁxed costs of $260,000.The company's break-even point in units is:

Question

Quizplus · Accepted Answer

First, calculate the contribution margin per unit: 
Contribution margin = Sales revenue - Variable costs 
Contribution margin per unit = ($1,000,000/20,000 units) - ($300,000/20,000 units) = $35 
Next, use the contribution margin per unit to calculate the break-even point: 
Break-even point (units) = Fixed costs / Contribution margin per unit 
Break-even point (units) = $260,000 / $35 = 7,428.57 units 
Round up to the nearest whole number: 
Break-even point (units) = 7,429 units.

At a Volume of 20,000 Units, Almount Industries Reported Sales