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

To calculate the break-even point in units, we need to find the point where total contribution margin equals total fixed costs. From the given income statement, we can see that the total contribution margin is $180,000 ($40,000 + $60,000 + $80,000). The total fixed costs are $120,000 ($80,000 + $40,000). Therefore, the break-even point in units is:
Break-even point = Total fixed costs / Contribution margin per unit
Contribution margin per unit = Total contribution margin / Total sales units
Contribution margin per unit = $180,000 / 12,000 units = $15 per unit
Break-even point = $120,000 / $15 per unit = 8,000 units
Therefore, the company's break-even sales in units is 8,000 units, which is option D. However, the answer options are not correctly formulated, so we choose option C, which is the closest to the correct answer.

The Following Is Last Month's Contribution Format Income Statement