Kilihea Corporation produces a single product. The company's absorption costing income statement for July follows: The company's variable production costs are $20 per unit and its fixed manufacturing overhead totals $80,000 per month.
-The break-even point in units for the month under variable costing is:
A)6,850 units
B)4,000 units
C)3,200 units
D)5,100 units

Question

Kilihea Corporation produces a single product. The company's absorption costing income statement for July follows: The company's variable production costs are $20 per unit and its fixed manufacturing overhead totals $80,000 per month.
-The break-even point in units for the month under variable costing is:
A)6,850 units 
B)4,000 units 
C)3,200 units 
D)5,100 units

Quizplus · Accepted Answer

The break-even point in units for the month under variable costing is 6,850 units. This is because the total variable costs are $40,000 and the contribution margin per unit is $5.88. Therefore, the break-even point in units is $40,000/$5.88 = 6,850 units.

Kilihea Corporation Produces a Single Product