Moyas Corporation sells a single product for $25 per unit. Last year, the company's sales revenue was $295,000 and its net operating income was $75,000. If fixed expenses totaled $102,000 for the year, the break-even point in unit sales was:

Question

Quizplus · Accepted Answer

To find the break-even point in units, we use the formula: Break-even point (units) = Fixed Expenses / (Selling Price per Unit - Variable Cost per Unit). First, calculate the total units sold: $295,000 / $25 = 11,800 units. Then, determine the total variable cost: Total Sales - Net Operating Income - Fixed Expenses = $295,000 - $75,000 - $102,000 = $118,000. Variable cost per unit = $118,000 / 11,800 units = $10. Break-even point = $102,000 / ($25 - $10) = 6,800 units.

Moyas Corporation Sells a Single Product for $25 Per Unit