Answer the following questions using the information below:
Northenscold Company sells several products. Information of average revenue and costs is as follows:

-The number of units that Northenscold's must sell each year to break even is:
A)8,000 units
B)12,000 units
C)16,000 units
D)indeterminable

Question

Answer the following questions using the information below:
Northenscold Company sells several products. Information of average revenue and costs is as follows:
 
-The number of units that Northenscold's must sell each year to break even is:
A)8,000 units 
B)12,000 units 
C)16,000 units 
D)indeterminable

Quizplus · Accepted Answer

The break-even point is the point at which total revenue equals total cost. At this point, the company is neither making a profit nor a loss. To calculate the break-even point, we need to know the fixed costs, the variable costs, and the selling price per unit.Fixed costs are costs that do not change with the level of production. Variable costs are costs that do change with the level of production.In this case, the fixed costs are $100,000, the variable costs are $5 per unit, and the selling price per unit is $10.To calculate the break-even point, we can use the following formula:Break-even point = Fixed costs / (Selling price per unit - Variable cost per unit)Plugging in the numbers, we get:Break-even point = $100,000 / ($10 - $5) = 8,000 unitsTherefore, the number of units that Northenscold's must sell each year to break even is 8,000 units.

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