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Wilson's Meats has fixed costs of $.60 for every pound of meat it sells given a sales level of 32,500 pounds. It charges $3.89 per pound of top-grade ground beef. The variable cost per pound is $2.99. If depreciation is $16,400, what is the accounting profit break-even point?

A. 31,948 pounds
B. 39,889 pounds
C. 32,467 pounds
D. 42,650 pounds

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Zviko

Answer:

the accounting profit break-even point is B. 39,889 pounds

Explanation:

Break-even Point is the point where an Entity neither makes a profit nor a loss.

Break - Even Point in Quantity = Fixed Costs/ Contribution per Unit

                                                   =($16,400 + 32,500 ×$0.60)/ $3.89 - $2.99

                                                   = 39,888.88888

                                                   = 39,889

Answer:

Correct option is B.

Accounting profit break-even point= $39,889

Explanation:

Break-even point = fixed expenses / price per unit - variable cost per unit

Fixed expenses = 32500 * 0.6 = 19500

Total fixed expenses = 19500 + 16400 = 35900

Break-even point = 35900 / 3.89 - 2.99 = 35900 / 0.9 = 39889 pounds.

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