Midway corporation is planning to sell 500,000 units for $100 per unit and will break even...
Midway corporation is planning to sell 500,000 units for $100 per unit and will break even at this level of sales. fixed expenses will be $10,000,000. what are the company's variable expenses per unit?
a. $20.00
b. $80.00
c. $24.00
d. $85.00
Homework Answers
b. $80.00
Unit sales to break even = Fixed expenses ÷ Unit CM
500,000 units = $10,000,000 ÷ Unit CM
Unit CM = $10,000,000 ÷ 500,000 units = $20.00 per unit
Unit CM = Selling price per unit −Variable expenses per unit
$20.00 per unit = $100.00 per unit −Variable expenses per unit
Variable expenses per unit = $100.00 per unit − $20.00 per unit = $80.00 per unit
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Midway corporation is planning to sell 500,000 units
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