Variable cost for Light.com's fluorescent tubes is $12.50, the tubes are sold over the internet to businesses and organizations for $20.00 each. Fixed costs are $7,500,000. What is the break-even quantity for the fluorescent tubes?
A) 600,000
B) 1,000,000
C) 375,000
D) 7,500,000

Question

Quizplus · Accepted Answer

The break-even quantity is calculated by dividing the fixed costs by the contribution margin per unit. The contribution margin per unit is the selling price minus the variable cost, which is $20.00 - $12.50 = $7.50. Therefore, the break-even quantity is $7,500,000 / $7.50 = 1,000,000 units.

Variable Cost for Light