A recent income statement of Suni Corporation reported the following data: $\begin{array}{lr}
\text { Sales revenue } & \$ 6,800,000 \
\text { Variable costs } & 2,800,000 \
\text { Fixed costs } & 2,500,000
\end{array}$ If these data are based on the sale of 20,000 units, the break-even point would be:

Question

Quizplus · Accepted Answer

The break-even point in units is calculated by dividing the total fixed costs by the contribution margin per unit. The contribution margin per unit is the sales price per unit minus the variable cost per unit. Here, the sales price per unit is $340 ($6,800,000 / 20,000 units) and the variable cost per unit is $140 ($2,800,000 / 20,000 units), so the contribution margin per unit is $200. The break-even point is $2,500,000 / $200 = 12,500 units.