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# Break-even point/Net operating income

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1. South Company sells a single product for \$20 per unit. If variable expenses are 60% of sales and fixed expenses total \$9,600, the break-even point will be:
A. \$24,000
B. \$14,400
C. \$9,600
D. \$16,000

2. Arthur Company has a margin of safety percentage of 25%. The break-even point is \$300,000 and the variable expenses are 45% of sales. Given this information, the net operating income is:
A. \$75,000
B. \$55,000
C. \$15,000
D. \$41,250

#### Solution Preview

1. The contribution margin is 1-60%=40%. The contribution margin per unit is 20X40%=\$8.
Breakeven units = Fixed Cost/Contribution margin per unit = 9,600/8=1,200
Breakeven Sales ...

#### Solution Summary

The solution explains the calculation of break-even point and net operating income

\$2.49