If the price per unit is $89 total fixed expenses are $456000 and the breakeven sales in dollar is 760000. What is the variable expenses per unit?

The variable expense per unit is $35.60.

  • Cost Per Unit = $89
  • Total Fixed Expenses = $456,000
  • Breakeven Sales = $760,000
  • Variable Expense Per Unit = ?

To arrive to the answer, we should first work out on getting the value of the total variable expenses.

  • Do this by using this formula: Total Variable Expenses = Breakeven Sales - Total Fixed Expenses
  • Plug in the numbers: Total Variable Expenses = $760,000 - $456,000
  • Total Variable Expenses = $304,000

Next, work on number of units sold to cover the "Breakeven Sales".

  • Do this by dividing Breakeven Sales by Cost Per Unit
  • Plug in the numbers: $760,000 / $89
  • Breakeven Price per Unit - 8,539 units

You can now work on getting the amount of variable expense per unit.

  • Do this by dividing the Total Variable Expenses by Breakeven Price per unit
  • Plug in the numbers: $304,000 / 8,539 units
  • Variable Expense per Unit = $35.60/unit

Fixed Cost - expenses that not change with an increase or decrease in the amount of goods or services produced.

Breakeven Price - the amount of money for which a product or service must be sold to cover the costs of manufacturing or providing it.

Unit Cost - cost incurred by a company to produce, store and sell one unit of a particular product; costs include all fixed costs all variable costs

Variable Cost - expenses that vary with production output; they rise as production increases and fall as production decreases.

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Friday, October 16 2015