Question

Minist Corporation sells a single product for $15 per unit. Last year, the company's sales revenue was $225,000 and its net operating income was $18,000. If fixed expenses totaled $72,000 for the year, the break-even point in unit sales was:

Answer 1

The break-even point in units for Minist Corporation is calculated using the formula: Fixed Expenses / (Sales Price per Unit - Variable Cost per Unit). After determining the variable cost per unit to be $9, the break-even point is found to be 12,000 units.

Step-by-step explanation:

The student is asking about calculating the break-even point for Minist Corporation, which involves understanding concepts from managerial accounting and cost-volume-profit (CVP) analysis. To find the break-even point in unit sales, we need to use the formula: Break-Even Point in Units = Fixed Expenses / (Sales Price per Unit - Variable Cost per Unit). From the information given, we know the fixed expenses and the sales price per unit, but we need to calculate the variable cost per unit. This calculation is based on the net operating income and the sales revenue.

First, we need to calculate the variable cost per unit. We know that Sales Revenue - Variable Costs - Fixed Expenses = Net Operating Income. Using the numbers provided ($225,000 - Variable Costs - $72,000 = $18,000), we can solve for the total variable costs, which turn out to be $135,000. To find the variable cost per unit, we divide the total variable costs by the number of units sold (which we get by dividing sales revenue by the sales price per unit, $225,000 / $15 = 15,000 units). This gives us a variable cost per unit of $9.

With the variable cost per unit calculated, we can now apply it to our break-even point formula: Break-Even Point in Units = $72,000 / ($15 - $9) = 12,000 units. Therefore, the break-even point for Minist Corporation is 12,000 units.

Answer 2

12000 units

Step-by-step explanation:

Given:

Selling price of a single product = $ 15

Sales revenue of the company = $ 225,000

Net operating income = $ 18,000

Fixed total expenses = $ 72,000

Now,

The number of units sold = $ 225,000 / 15 = 15000

Operating income = Sales – variable cost – fixed cost

on substituting the value,

$ 18,000 = $ 225,000 – $ 72,000 – Variable cost

or

Variable cost = $ 225,000-72,000-18,000 = $ 135,000

Now, the variable cost for the single unit = $ 135,000 / 15000 = $ 9

thus,

Break even point = Total fixed cost/( Selling price – variable cost)per unit

or

Break even point = $ 72000 / ( $ 15 – $ 9)

or

Break even point = 12000 units