Cornelius' Cheeseburgers sells gourmet cheeseburgers. These cheeseburgers are so good, it is the only item on the menu. In recent years, Cornelius' breakeven point has been 40,000 cheeseburgers. Annual fixed cost are $200,000 and the cheeseburgers have a sales price of $15.
What is the variable cost per unit of each cheeseburger?

Question

Quizplus · Accepted Answer

Breakeven units = Fixed costs / Unit contribution Margin
Breakeven units = Fixed costs / (Selling price per unit - Variable cost per unit)
40,000 cheeseburgers = $200,000/($18 - X)
$18 - X = $200,000 / 40,000 cheeseburgers = $5
X = $13

Cornelius' Cheeseburgers Sells Gourmet Cheeseburgers