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Information concerning a product produced by Ender Company appears here: Sales price per unit $ 200 Variable cost per unit $ 80 Total annual fixed manufacturing and operating costs $ 600,000 Required Determine the following: a. Contribution margin per unit. b. Number of units that Ender must sell to break even.

Respuesta :

Answer:

a. $120

b. 5,000 units

Explanation:

(a) The formula to compute the contribution margin unit is shown below:

Contribution margin per unit = Selling price per unit - Variable expense per unit  

= $200 - $80

= $120

(b) The formula to compute the break even point is shown below:

= (Total annual fixed manufacturing and operating costs) ÷ (Contribution margin per unit)  

= $600,000 ÷ $120

= 5,000 units

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