The following is last month's contribution format income statement:

What is the company's break-even sales in units?

Question

The following is last month's contribution format income statement:

What is the company's break-even sales in units?

Quizplus · Accepted Answer

The break-even point in units can be calculated using the formula: 
Break-even point = Fixed Costs / Contribution Margin per Unit

From the contribution format income statement: 
Fixed Costs = $120,000 
Contribution Margin per Unit = Sales Price per Unit - Variable Cost per Unit = $50 - $30 = $20

Therefore, 
Break-even point in Units = $120,000 / $20 = 6,000 units

Hence, the answer is C, 6,000 units.

The Following Is Last Month's Contribution Format Income Statement