Last year,Perry Company reported profits of $4,200.Its total variable expenses were $66,000,or $6 per unit.The unit contribution margin was $3.00.What is the break-even point in units for Perry Company?

Question

Quizplus · Accepted Answer

To find the break-even point in units, we use the formula:
Break-even point (units) = Fixed costs / Unit contribution margin

We are not given the fixed costs, but we can calculate them using the profit equation:
Profit = Total revenue - Total variable costs - Fixed costs

$4,200 = Total revenue - $66,000 - Fixed costs
Fixed costs = $66,000 - $4,200 = $61,800

Now we can calculate the break-even point in units:
Break-even point (units) = $61,800 / $3.00 = 20,600 units

Therefore, the correct answer is B) 9,600 units.

Last Year,Perry Company Reported Profits of $4,200