If the sales price per unit is $32, total fixed expenses are $45,000 and the breakeven sales in dollars is $180,000, what is the variable expense per unit?
A) $8.00
B) $4.20
C) $4.00
D) $24.00

Question

Quizplus · Accepted Answer

The variable expense per unit can be calculated by first finding the contribution margin per unit, which is the sales price per unit minus the variable expense per unit. The breakeven point in units can be calculated by dividing the total fixed expenses by the contribution margin per unit. Since the breakeven sales in dollars is $180,000 and the sales price per unit is $32, we can find the number of units needed to break even by dividing $180,000 by $32, which gives 5625 units. To find the total variable expenses, we subtract the total fixed expenses from the breakeven sales, which gives $180,000 - $45,000 = $135,000. Dividing the total variable expenses by the number of units gives the variable expense per unit, which is $135,000 / 5625 = $24. Therefore, the variable expense per unit is $24.

If the Sales Price Per Unit Is $32, Total Fixed