Break-even Analysis – Short Answer

Practice Question

Intro to Managerial Accounting
Decision-Making: Cost-Volume-Profit Analysis
Break-even Analysis
Short Answer

Calculate the break-even point in units if fixed costs are $100,000 and the contribution margin per unit is $25.

Answer +
Correct Answer: 4,000 units
Explanation +

Break-even Point in Units = Fixed Costs / Contribution Margin per Unit = $100,000 / $25 = 4,000 units.

This calculation is vital for assessing how many units need to be sold to cover all costs (Page 47).