Sufra Corporation is planning to sell 100,000 units for $3.20 per unit and will break even at this level of sales. Fixed expenses will be $111,000. What are the company's variable expenses per unit?

Question

Quizplus · Accepted Answer

To break even, total revenue needs to equal total expenses:

Total revenue = 100,000 units × $3.20 per unit = $320,000
Total expenses = Fixed expenses + Variable expenses × Number of units

Plug in the given information:

$320,000 = $111,000 + Variable expenses × 100,000 units

Solve for variable expenses:

Variable expenses = ($320,000 − $111,000) ÷ 100,000 units = $2.09 per unit

Therefore, the answer is C, $2.09 per unit.

Sufra Corporation Is Planning to Sell 100,000 Units for $3