The selling price of a particular product is $7.00 per unit, fixed costs total $18,000, and the breakeven sales in dollars is $24,000. What would be the variable expense per unit

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tutorAnne tutorAnne · Answer 1 · 2021-01-16T01:15:46+01:00

Answer:Variable cost per unit = $1.75

Explanation:

Break even in dollars is calculated using Fixed Expense/ Contribution Margin Ratio

therefore

Contribution margin Ratio =Fixed expenses/Break even in dollar

= $18,000 / $24,000

= 0.75

Contribution Margin =Sales × Contribution Margin Ratio

$7 x 0.75=$5.25

Variable cost per unit = Sales - Contribution margin

=$7.00 - $5.25

Variable cost per unit = $1.75

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Tundexi Tundexi · Answer 2 · 2021-12-10T15:10:15+01:00

The variable expense per unit will be $1.75.

Break even unit is derived through {Fixed Expense/ Contribution Margin Ratio}

Contribution margin Ratio = Fixed expenses/Break even in dollar

Contribution margin Ratio = $18,000 / $24,000

Contribution margin Ratio = 0.75

Contribution Margin = Sales * Contribution Margin Ratio

Contribution Margin = $7 * 0.75

Contribution Margin = $5.25

Hence, we can derive the variable cost per unit through {Sales - Contribution margin}

Variable cost per unit = $7.00 - $5.25

Variable cost per unit = $1.75

Therefore, the variable expense per unit will be $1.75.