At a break-even point of 800 units sold,White Company's variable expenses are $8,000 and its fixed expenses are $4,000.What will the Company's net income be at a volume of 801 units?

Question

Quizplus · Accepted Answer

At the break-even point, total revenue equals total expenses (variable + fixed). Selling one more unit (801st unit) will generate additional revenue equal to the contribution margin per unit. The contribution margin per unit is the selling price per unit minus the variable cost per unit. Since the break-even point is 800 units with variable expenses of $8,000, the variable cost per unit is $10 ($8,000/800). The contribution margin per unit is $5 (since fixed expenses are $4,000, the total revenue at break-even is $12,000, making the selling price per unit $15). Therefore, selling the 801st unit will result in a net income of $5.

At a Break-Even Point of 800 Units Sold,White Company's Variable