If the selling price per unit is $10.00, the variable expense per unit is $5.75, and the break-even sales in dollars is $465,200, what are total fixed expenses?

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Quizplus · Accepted Answer

To find the total fixed expenses, we first calculate the contribution margin per unit, which is the selling price per unit minus the variable expense per unit: $10.00 - $5.75 = $4.25. Then, we use the formula for break-even sales in dollars, which is (Fixed Expenses / Contribution Margin per Unit) * Selling Price per Unit. Rearranging this formula to solve for fixed expenses gives us Fixed Expenses = (Break-even Sales in Dollars / Selling Price per Unit) * Contribution Margin per Unit. Plugging in the numbers: Fixed Expenses = ($465,200 / $10.00) * $4.25 = $197,710.

If the Selling Price Per Unit Is $10