Posted: July 9th, 2016

# What is the break-even point in units?

1. The income statement for Thomas Manufacturing Company for 2006 is as follows:

Sales (10,000 units) \$120,000
Variable expenses 72,000
Contribution margin \$ 48,000
Fixed expenses 36,000
Operating income \$ 12,000

What is the contribution margin per unit?
a. \$7.20
b. \$1.20
c. \$4.80
d. \$120,000

2. Baker Company sells its product for \$60. In addition, it has a variable cost ratio of 40 percent and total fixed costs of \$9,000. How many units must be sold in order to obtain a before-tax profit of \$12,000?
a. 350 units
b. 584 units
c. 875 units
d. 333 units

3. Lewis Production Company had the following projected information for 2006:

Selling price per unit \$150
Variable cost per unit \$90
Total fixed costs \$300,000

What is the break-even point in units?
a. 2,000 units
b. 5,000 units
c. 3,333 units
d. 60,000 units

4. Assume the following cost behavior data for Portrait Company:

Sales price \$18.00 per unit
Variable costs \$13.50 per unit
Fixed costs \$22,500
Tax rate 40%

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