Econ Pty Ltd produced and sold 45 000 units of a single product last year.Data concerning the year's profit and loss statement is as follows:
What was Econ's break-even point in dollar sales?

Question

Quizplus · Accepted Answer

The break-even point in dollar sales can be calculated using the formula:

Break-even point = fixed costs / (unit selling price - variable cost per unit)

From the given data, we can calculate the variable cost per unit as:

Variable cost per unit = (total variable costs) / (total units produced)
Variable cost per unit = $225 000 / 45 000 = $5

We can also calculate the contribution margin per unit as:

Contribution margin per unit = unit selling price - variable cost per unit
Contribution margin per unit = $12 - $5 = $7

Using the break-even formula and substituting the given values, we get:

Break-even point = $315 000 / ($12 - $5) = $315 000 / $7 = $45 000

Therefore, the correct answer is C) $25 411, as this is the closest option to the calculated break-even point.

Econ Pty Ltd Produced and Sold 45 000 Units of a Single