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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

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BuyFindarrow_forward

Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

If the unit selling price is $16. the unit variable com is $12, and fixed costs are $160,000, what are the break-even sales (units)?
A. 5,714 units
B. 10,000 units
C. 13.333 units
D. 40,000 units

To determine

Concept Introduction:

Breakeven Point:

The Breakeven point is the level of sales at which the net profit is nil. It can be explained as a situation where the business is generating a sale that is equal to the expenses incurred and hence no profits no loss. Breakeven point in units is calculated with the help of following formula:

  Breakeven point (units) = Total Fixed Costs(Sales Price Per unit -Variable Cost per unit) 

To Calculate:

The Breakeven sales in units

Explanation

The Breakeven sale in units is calculated as follows:

Breakeven point in units is calculated with the help of following formula:

  Breakeven point (units) = <

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