Break-Even (Sales Dollars) Fixed expenses total $28,678, the break-even sales in dollars is $92,512, and the selling price per unit is $98

Finance Jun 23, 2021

Break-Even (Sales Dollars) Fixed expenses total $28,678, the break-even sales in dollars is $92,512, and the selling price per unit is $98. Calculate the variable expense per unit (round to the nearest cent).

Expert Solution

Computation of Variable Expenses per Unit:

Break-even Sales in Dollars = Fixed Cost/Contribution Margin Ratio

$92,512 = $28,678/Contribution Margin Ratio

Contribution Margin Ratio = $28,678/$92,512

Contribution Margin Ratio = 31.00%

Contribution Margin Ratio = (Selling Price per Unit-Variable Expenses per Unit)/Selling Price per Unit

Contribution Margin Ratio*Selling Price per Unit = Selling Price per Unit-Variable Expenses per Unit

31.00%*98 = 98 - Variable Expenses per Unit

Variable Expenses per Unit = 98 - 30.38

Variable Expenses per Unit = $67.62 per unit

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