Answer the following questions using the information below:
Warne's Flipper Company sells several products.Information of average revenue and costs is as follows:
$\begin{array}{lr}
\text { Selling price per unit } & \$ 25.00 \
\text { Variable costs per unit: } & \
\text { Direct material } & \$ 5.00 \
\text { Direct manufacturing labour } & \$ 1.80 \
\text { Manufacturing overhead } & \$ 0.80 \
\text { Selling costs } & \$ 2.00 \
\text { Annual fixed costs } & \$ 96000
\end{array}$
-The number of units that Warne's Flipper must sell each year to break even is:
A)6234 units.
B)12 896 units.
C)16 358 units.
D)indeterminable.

Question

Answer the following questions using the information below:
Warne's Flipper Company sells several products.Information of average revenue and costs is as follows:
 $\begin{array}{lr}
\text { Selling price per unit } & \$ 25.00 \
\text { Variable costs per unit: } & \
\text { Direct material } & \$ 5.00 \
\text { Direct manufacturing labour } & \$ 1.80 \
\text { Manufacturing overhead } & \$ 0.80 \
\text { Selling costs } & \$ 2.00 \
\text { Annual fixed costs } & \$ 96000
\end{array}$
-The number of units that Warne's Flipper must sell each year to break even is:
A)6234 units.
B)12 896 units.
C)16 358 units.
D)indeterminable.

Quizplus · Accepted Answer

To calculate the break-even point in units, we first determine the contribution margin per unit, which is the selling price per unit minus the variable costs per unit. The variable costs per unit include direct material, direct manufacturing labor, manufacturing overhead, and selling costs, totaling $5.00 + $1.80 + $0.80 + $2.00 = $9.60. The selling price per unit is $25.00, so the contribution margin per unit is $25.00 - $9.60 = $15.40. The break-even point in units is then calculated by dividing the annual fixed costs by the contribution margin per unit: $96,000 / $15.40 = 6233.77 units. Rounding to the nearest whole unit gives 6234 units.

Answer the Following Questions Using the Information Below: Warne's Flipper

Answer the Following Questions Using the Information Below:
Warne's Flipper