Answer (D) is correct . The breakeven point in units is found by dividing total fixed costs by the contribution margin per unit. Variable costs are $700,000 at 100,000 units, or $7 per unit. Selling price is $10 per unit, resulting in a contribution margin per unit of $3. Dividing $210,000 of fixed costs by $3 per unit results in a breakeven point of 70,000 units.
Answer (A) is incorrect because Fixed costs should be divided by the contribution margin, not unit variable costs.
Answer (B) is incorrect because Total cost ¡Â selling price is 91,000 units.
Answer (C) is incorrect because Selling and administrative costs are included in the contribution margin. |
The Bidwell Company’s breakeven sales in units are
