Breakeven Analysis: Contribution Margin Income Statement: Videos & Practice Problems

If Pattigan’s Planes, a model airplane company, produces an output that is above their estimated break-even point, we would expect them to have:

• A. positive net operating income
• B. negative net operating income
• C. we cannot determine from the information provided

Answer: (A)

Pattigan’s Planes produces model airplanes which sell for \$50 each. If Pattigan’s Planes has \$50,000 in fixed costs and pays \$30 in variable costs per unit, what is Pattigan’s Planes’ break-even point?

• A. 5,000 units
• B. 2,500 units
• C. 1,250 units
• D. 625 units

Answer: (B)