Answer the following question(s)using the information below.Ms.Andrea Chadwick, the company president, has heard that there are multiple break-even points for every product.She does not believe this and has asked you to provide the evidence of such a possibility.Some information about the company for current year is as follows:

-What are break-even sales in units using absorption costing if the production units are actually 25,000?

Question

Answer the following question(s)using the information below.Ms.Andrea Chadwick, the company president, has heard that there are multiple break-even points for every product.She does not believe this and has asked you to provide the evidence of such a possibility.Some information about the company for current year is as follows:
 
-What are break-even sales in units using absorption costing if the production units are actually 25,000?

Quizplus · Accepted Answer

The break-even sales in units using absorption costing can be calculated as follows:

Fixed expenses = $275,000 
Unit variable expenses = ($20 + $5 + $8) = $33 
Contribution margin per unit = $60 - $33 = $27 
Break-even sales in units = Fixed expenses / Contribution margin per unit 
= $275,000 / $27 
= 10,185 units

However, since the production units are actually 25,000, we need to calculate the break-even sales based on this level of production:

25,000 units - 10,185 units = 14,815 units

Therefore, the break-even sales in units using absorption costing when the production units are actually 25,000 is 14,815 units, which is closest to option D (8,847 units).

Answer the Following Question(s)using the Information Below