The Following Information Describes a Product Expected to Be Produced

question 51

Essay

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

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Definitions:

Common-size Percent

A financial analysis tool that converts income statement items into percentage of revenue, facilitating trend analysis and comparison.

Total Assets

The sum of all resources owned by a company, including cash, inventory, property, and equipment, reported on the balance sheet.

Cash

Liquid currency and readily accessible funds available in checking and savings accounts, often used to meet short-term financial obligations.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year, calculated as current assets divided by current liabilities.