Question

Oslo Co prepared the following Contribution Format income statement based on sales volume of 1,000 units. (the relevant rage of production is 500 to 1500 units):

Sales 80,000
Var C 52,000
CM 28,000
Fixed 21,840
NOI 6,160

What is the break-even point in unit sales?

Answer 1

To find the break-even point in unit sales, you can divide the fixed expenses by the contribution margin per unit.

Step-by-step explanation:

The contribution margin is calculated by subtracting the variable expenses (VC) from the sales revenue. In this case, the contribution margin per unit is $28,000 / 1,000 units, which equals $28 per unit. The total fixed expenses (FE) are $21,840. The break-even point in units can be calculated by dividing the fixed expenses by the contribution margin per unit: $21,840 / $28 = 780 units.