Question

If the selling price per unit is​ $10, the unit contribution margin is​ $5, and total fixed expenses are​ $17,500, what are the breakeven sales in​ units?

a) 3,500 units
b) 5,000 units
c) 7,500 units
d) 10,000 units

Answer 1

The breakeven sales in units can be calculated by dividing the fixed expenses by the unit contribution margin.

Step-by-step explanation:

The breakeven sales in units can be calculated using the formula:

Break-even Sales (in units) = Fixed Expenses / Unit Contribution Margin

Given that the unit contribution margin is $5 and the total fixed expenses are $17,500, we can substitute these values into the formula:

Break-even Sales (in units) = $17,500 / $5 = 3,500 units

Therefore, the breakeven sales in units is 3,500 units, option (a).