6 Minist Corporation sells a single product for 15 per unit

6. Minist Corporation sells a single product for $15 per unit. Last year, the company\'s sales revenue was $225,000 and its net operating income was $18,000. If fixed expenses totaled S72,000 for the year, the break-even point in unit sales was (choose the closest answer) A. 15,000 B. 9,900 C. 14,400 D. 12,000 E. 18,000

Solution

Units sold last year=$225000/15=15000 units.

Contribution margin-Fixed cost=Net operating income

Hence last year Total Contribution margin=(18000+72000)=$90000

Contribution margin per unit=$90000/15000=$6 per unit

At breakeven;Contribution margin=Fixed cost=$72000

Hence breakeven unit=$72000/6

=12000 units.