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If selling price is $18 per unit, variable costs are $8 per unit and fixed costs are $24 000 per annum, the break-even point in units is:Group of answer choices2400 units.1333 units.2500 units.3000 units.

Question

If selling price is 18perunit,variablecostsare18 per unit, variable costs are 8 per unit and fixed costs are $24 000 per annum, the break-even point in units is:Group of answer choices2400 units.1333 units.2500 units.3000 units.

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Solution

To calculate the break-even point in units, you need to divide the fixed costs by the contribution margin per unit. The contribution margin per unit is calculated by subtracting the variable cost per unit from the selling price per unit.

Here's the step-by-step calculation:

  1. Calculate the contribution margin per unit: Selling price per unit (18)Variablecostperunit(18) - Variable cost per unit (8) = $10 per unit.

  2. Calculate the break-even point in units: Fixed costs (24,000)/Contributionmarginperunit(24,000) / Contribution margin per unit (10) = 2400 units.

So, the break-even point in units is 2400 units.

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