If fixed costs are $561,000 and the unit contribution margin is $8.00, what is the break-even point in units if variable costs are decreased by $0.50 a unit? a.66,000 b.74,800 c.60,000 d.70,125

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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If fixed costs are $561,000 and the unit contribution margin is $8.00, what is the break-even point in units if variable costs are decreased by $0.50 a unit?
a.66,000
b.74,800
c.60,000
d.70,125
Expert Solution
Step 1

Meaning of Break Even Point:-

The break-even point can be defined as a point where total costs (expenses) and total sales (revenue) are equal. Break-even point can be described as a point where there is no net profit or loss. 

Formula :- 

Break Even Point(Units)  =  Total Fixed Cost / Contribution Margin per Unit 

                                    

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