Question

Barrymore Industries has monthly fixed costs totaling $30,000 and variable costs of $5 per unit. Each unit of product is sold for $20.

What is the break-even point in units?

1,200

6,000

1,500

2,000

Barrymore Industries has monthly fixed costs totaling $30,000 and variable costs of $5 per unit. Each unit of product is sold for $20.

How many units must be sold to earn a monthly profit of $45,000?

2,250

3,000

5,000

2,000

Barrymore Industries has monthly fixed costs totaling $30,000 and variable costs of $5 per unit. Each unit of product is sold for $20.

Assume that Barrymore Company expects to sell 3,950 units of product this coming month. What is the margin of safety in units?

2,200

1,950

2,950

2,450

Answer 1

Ans. 1	Option 4th
	Break even point in units = Fixed cost / Contribution margin per unit
	$30,000 / $15
	2000	units
	*Contribution margin per unit =   Selling price per unit - Variable cost per unit
	$20 - $5    =   $15 per unit
Ans. 2	Option 3rd
	Sales units for desired profit =   (Fixed cost + Profit) / Contribution margin per unit
	($30,000 + $45,000) / $15
	5000	units
	*Contribution margin per unit = $15 per unit (as calculated in above Ans. 1).
Ans. 3	Option 2nd
	Margin of safety in units = Actual sales units - Break even sales units
	3,950 - 2,000
	1950	units
	*Break even sales units =   2000 (as calculated above in Ans. 1).