If the sales price per unit is $48.00, the total fixed costs are $67,500, and the break-even volume in dollar sales is $270,000, then the unit variable cost is
A) $4.00.
B) $6.33.
C) $12.00.
D) $36.00.

Question

Quizplus · Accepted Answer

The break-even point in dollar sales is calculated as Fixed Costs / (1 - (Variable Cost per Unit / Sales Price per Unit)). Given the break-even sales of $270,000 and fixed costs of $67,500, we can solve for the variable cost per unit: $67,500 / (1 - (VC / $48)) = $270,000. Solving for VC gives a unit variable cost of $36.00.

If the Sales Price Per Unit Is $48