Lewis Production Company had the following projected information for 2006:
- What is the profit when one unit more than the break-even point is sold?

Question

Lewis Production Company had the following projected information for 2006: 
- What is the profit when one unit more than the break-even point is sold?

Quizplus · Accepted Answer

To find the profit when one unit more than the break-even point is sold, we need to first calculate the break-even point.

Break-even point = Fixed costs / (Price per unit - Variable cost per unit)
Break-even point = $300,000 / ($60 - $25)
Break-even point = 8,571.43 units

Since the projected sales for 2006 are 10,000 units, the company is expected to sell 1,428.57 units more than the break-even point.

Total revenue from these extra units = (1,428.57 units) x ($60 per unit) = $85,714.28
Total variable cost of these extra units = (1,428.57 units) x ($25 per unit) = $35,714.28
Total contribution margin = $85,714.28 - $35,714.28 = $50,000

Therefore, the profit when one unit more than the break-even point is sold is $50,000, which corresponds to choice B.

Lewis Production Company Had the Following Projected Information for 2006