Answer the following questions using the information below:
Nancy's Niche sells a single product. 8,000 units were sold resulting in $80,000 of sales revenue, $20,000 of variable costs, and $10,000 of fixed costs.
-The breakeven point in total sales dollars is:
A)$40,000
B)$13,334
C)$100,000
D)None of these answers are correct.

Question

Quizplus · Accepted Answer

To calculate the breakeven point in total sales dollars, we can use the following formula:
Breakeven Point = Fixed Costs / (Unit Price - Variable Costs per unit)

In this case:
Unit Price = Sales Revenue / Number of Units sold = $80,000 / 8,000 = $10
Variable Costs per unit = $20,000 / 8,000 = $2.50
Fixed Costs = $10,000

Breakeven Point = $10,000 / ($10 - $2.50) = $10,000 / $7.50 = $1,333.33

Therefore, the breakeven point in total sales dollars is $13,333.33 or approximately $13,334. Answer B is correct.

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