Question

South Company sells a single product for $20 per unit. If variable expenses are 60% of sales and fixed expenses total $9,600, the break-even point will be

Answer 1

The Break-even point in units= 1,200 units

Step-by-step explanation:

The break-even point (BEP) is the quantity of each product to be sold such that the business makes no profit or loss.

The beak-even point can be determined as follows:

The Break-even point in units = Total general fixed cost / Contribution per unit margin

Contribution per unit = Selling price - variable cost

= 20 - ( 60% × 20)= 8

The Break-even point in units= 9,600/8 =1,200 units

The Break-even point in units= 1,200 units