Boswell company reported the following information for the current year: Sales (50000 units) $1000000 direct materials and direct labor $500000 other variable costs $50000 and fixed costs $360000. What is Boswell's break-even point in units?
A) 32728.
B) 40000.
C) 51112.
D) 56250.

Question

Quizplus · Accepted Answer

Break-even point in units = Fixed costs / Contribution margin per unit
Contribution margin per unit = Sales price per unit - Variable cost per unit
Variable cost per unit = (Direct materials and direct labor + Other variable costs) / Number of units = ($500,000 + $50,000) / 50,000 = $11
Contribution margin per unit = $20 - $11 = $9
Break-even point in units = $360,000 / $9 = 40,000 units.

Boswell Company Reported the Following Information for the Current Year