Question

Steeler corporation is planning to sell 100,000 units for 2.00 per unit and will break even at this level of sales fixed expenses will be 75,000 what are the company's variable expenses per unit

Answer 1

1.25 per unit

Step-by-step explanation:

Number of units to sell = 100,000

Price per unit = 2

Fixed expense = 75000

At break even point :

Revenue = total expenses

Total expenses = fixed cost + variable cost

Let variable cost = x

Revenue = units to sell * price per unit

Revenue = 100,000 * 2 = 200,000

Hence,

Fixed cost + variable cost = Revenue

75000 + x = 200,000

x = 200, 000 - 75000

x = 125,000

Variable cost = 125,000

The variable expense per unit is thus :

Variable expense / number of units

125,000 / 100,000 = 1.25 per unit