Tanner Company’s most recent contribution format income statement is presented below:

Tanner Company's contribution income statement
Sales

$96,000

Variable expenses

57,600

Contribution margin

38,400

Fixed expense

43,200

Net operating loss

$(4,800)

The company sells its only product for $24 per unit. There were no beginning or ending inventories.

The company’s break-even point in units sold is:

Question

Tanner Company’s most recent contribution format income statement is presented below:

Tanner Company's contribution income statement
Sales

$96,000

Variable expenses

57,600

Contribution margin

38,400

Fixed expense

43,200

Net operating loss

$(4,800)

The company sells its only product for $24 per unit. There were no beginning or ending inventories.

The company’s break-even point in units sold is:

BlackTom AI · Accepted Answer

Contribution margin per unit equals sales price minus variable cost per unit, so find unit data first.

1. Relevant knowledge points and concepts
- Contribution margin (CM) = Sales − Variable expenses. CM per unit = Selling price per unit − Variable cost per unit.
- Break-even in units = Fixed expenses ÷ CM per unit.
- When no beginning/ending inventory, total sales divided by unit price gives units sold.

2. Step-by-step reasoning
- Determine current units sold from total sales and unit price.
- Compute variable cost per unit and CM per unit.
- Apply break-even formula using fixed expenses and CM per unit.

3. Calculations with intermediate steps
- Units sold currently = Total sales ÷ Price per unit = $96,000 ÷ $24 = 4,000 units.
- Variable cost per unit = Total variable expenses ÷ Units = $57,600 ÷ 4,000 = $14.40 per unit.
- Contribution margin per unit = Price − Variable cost = $24.00 − $14.40 = $9.60 per unit.
- Break-even units = Fixed expenses ÷ CM per unit = $43,200 ÷ $9.60.
- Compute: $43,200 ÷ $9.60 = 4,500 units.

4. Why the correct answer is correct
- At 4,500 units, total contribution = 4,500 × $9.60 = $43,200, which exactly covers fixed expenses, producing zero net operating income. That is the definition of break-even.

5. Why the other options are incorrect
- 4,000 units: this is current sales level; contribution (4,000 × $9.60 = $38,400) is $4,800 short of fixed costs, causing the reported loss.
- 4,800 units: yields contribution of 4,800 × $9.60 = $46,080, creating a profit of $2,880, so not break-even.
- 5,000 units: yields contribution of 5,000 × $9.60 = $48,000, producing a profit of $4,800, not break-even.

6. Conclusion
Therefore, the company’s break-even point in units is 4,500 units, which matches the provided answer.

类似问题

EA 5 - What is the company’s break-even point in dollars?

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