a) Breakeven point in units = Fixed Expenses/Contribution Per unit — The difference absorption and variable costing due manufacturing overheads 000 Net income

Answer

The difference in absorption and variable costing is due to fixed manufacturing overheads of $20,000.Net income under variable costing is $220,000. Therefore, the contribution under variable costing should be $220,000+$20,000 =$240,000. This contribution is of 80,000 units because out of 100,000 units 20,000units are still in hand. Therefore contribution per unit will be $240,000/80000 =$3 per unit.

In the absence of the selling price per unit and variable cost per unit, we are assuming selling price to be$10 per unit and variable cost as $7 per unit.

Sales =$10

(-) Variable cost =$7

Contribution =$3