If the sales price per unit is $8.50, the variable expenses per unit is $6.75, and the breakeven point in sales dollars is $331,500, what are total fixed expenses?
A) $22,286
B) $68,250
C) $39,000
D) $26,325

Question

Quizplus · Accepted Answer

Fixed expenses can be calculated using the formula: Fixed Expenses = Breakeven Point in Sales Dollars - (Sales Price per Unit - Variable Expenses per Unit) * Units Sold at Breakeven. First, find the contribution margin per unit: $8.50 - $6.75 = $1.75. Then, to find the units sold at breakeven, divide the breakeven sales dollars by the sales price per unit: $331,500 / $8.50 = 39,000 units. Finally, calculate the fixed expenses: $331,500 - ($1.75 * 39,000) = $68,250.

If the Sales Price Per Unit Is $8