Problem
The company's Accounting Department has determined the break-even point to be 14,000 units per month, computed as follows:
Fixed cost per month = $420,000 = 14,000 units
Unit contribution margin $30 per unit
On receiving this figure, the president commented, There's something peculiar here. The comptroller says that the break-even point is 14,000 units per month. Yet we sold only 13,000 units in May, and the income statement we received showed a $2,000 profit. Which figure do we believe?