Answered: Refik Company has a break-even point of…

Refik Company has a break-even point of 20,000 units. If the company’s sole product sells for $38 and fixed costs total $260,000, the variable cost per unit must be: a. $14 b. $12 c. $25 d. $47

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Refik Company has a break-even point of 20,000 units. If the company’s sole product
sells for $38 and fixed costs total $260,000, the variable cost per unit must be:

a. $14

b. $12

c. $25

d. $47

Expert Solution

Step 1

The breakeven point is the point of sales where the total fixed cost is equal to the total contribution or there is no profit or loss for the company.

Formula used:

Contribution margin per unit = Fixed costs ÷ Breakeven sales units

Variable cost per unit = Selling price - Contribution margin per unit

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