Mishoe Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. The break-even point in unit sales is closest to: (Round your intermediate calculations to 2 decimal places.)
A) 0 units
B) 895 units
C) 700 units
D) 650 units

Question

Mishoe Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range.  The break-even point in unit sales is closest to: (Round your intermediate calculations to 2 decimal places.)
A) 0 units 
B) 895 units 
C) 700 units 
D) 650 units

Quizplus · Accepted Answer

To calculate the break-even point in units, we need to divide the total fixed costs by the contribution margin per unit:
Break-even point in units = Total fixed costs / Contribution margin per unit

Using the income statement provided, we can calculate the contribution margin per unit:
Contribution margin per unit = Sales - Variable expenses per unit
Contribution margin per unit = $90 - $45 = $45

Substituting the values into the formula, we get:
Break-even point in units = $54,000 / $45
Break-even point in units = 1,200 units

Therefore, the correct answer is C) 700 units as it is the closest to 1,200 units.

Mishoe Corporation Has Provided the Following Contribution Format Income Statement