A company faces fixed costs of $100,000 and variable costs of $8.00/unit.It plans to directly sell its product to the market for $12.00.How many units must it produce and sell to break even?
A)50,000
B)20,000
C)40,000
D)25,000
E)not enough information to calculate

Question

Quizplus · Accepted Answer

To break even, total revenue must equal total costs. The break-even point in units is calculated as Fixed Costs / (Selling Price per Unit - Variable Cost per Unit) = $100,000 / ($12 - $8) = 25,000 units.

A Company Faces Fixed Costs of $100,000 and Variable Costs