The Following Information Describes a Product Expected to Be Produced

question 75

Essay

The following information describes a product expected to be produced and sold by Pepin Corporation:
$$\begin{array} { l l } \text { Selling price } & \$ 32 \text { per unit } \\\text { Variable costs } & \$ 27 \text { per unit } \\\text { Total fixed costs } & \$ 850,000 \text { per year }\end{array}$$ Required:
a.Calculate the contribution margin per unit.
b.Calculate the break-even point in units.

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Definitions:

Year 2

Generally refers to the second year of operation, or the second year being considered in a multi-year analysis.

Debt-to-Equity Ratio

An indicator of the relative amounts of shareholders' equity and debt financing employed to support a company's assets.

Year 2

Not applicable as a key term for a specific definition without context.

Average Sale Period

An efficiency ratio that indicates the average number of days it takes for a company to convert its inventory into sales.