Question

Q3. You are given the following information: Selling price per unit Variable cost per unit $ 200 $ 80 $ 12000 Fixed cost You are required to find how many units must be sold by the company to achieve break-even using the income statement approach. A3.

Answer 1

The total numbers of units that must be sold by the company to achieve break-even using the income statement approach is 100Units.

Explanation

First of all the break-even units can only be calculated if the fixed cost and contribution per unit is given. In this given question only Fixed Cost is given.

So, now we have to calculate contribution (per unit).
The formula for Contribution is Sales Price (per unit) less Variable Cost (per unit).

Now,
Break-even (in units) = Fixed Cost/Contribution (per unit)

The calculated Break-even units = 100units.

Further calculation is below in form of an image.

Break -even Sales Cin Units) Formula foY fixed Cost Contribution (per Unit) Break-even. (in Units) Given, Fixed Cost = $ 12,000 Selling price per Unit Yariable Cost per Unit. Contribution (per Unit) Less Hence, Selling Price Less : Variable Cost $4200 80 Contribution = (per Unit). $120 Now, 8a২ - 2২n (in Units) $12.000 $ 12० Units 100 Hence, loo Units must be sold by the Company to Using the break-even. ochieve income statement approach