Question

Mishoe Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (1,000 units) $ 50,000 Variable expenses 32,500 Contribution margin 17,500 Fixed expenses 12,250 Net operating income $ 5,250 The break-even point in unit sales is closest to:______ a) 0 units b) 895 units c) 700 units or 650

Answer 1

700 units

Step-by-step explanation:

Mishoe corporation has a sales of $50,000(1,000 unit)

Variable expense is $32,500

Contribution margin is 17,500

Fixed expenses is 12,250

Net operating income is $5,250

The first step is to calculate the contribution margin per unit

= $17,500/1000

= $17.5 per unit

Therefore, the break-even point in unit sales can be calculated as follows

= Fixed cost/contribution margin per unit

= $12,250/$17.5

= 700 units

Hence the break-even point in unit sales is closest to 700 units