Chase Company's new product is expected to have a sales price of $15 and variable unit price of $7.Fixed costs are expected to be $560,000.What is the break-even point in sales dollars?
A)$840,000
B)$1,050,000
C)$560,000
D)$1,200,000

Question

Quizplus · Accepted Answer

The break-even point in sales dollars can be calculated using the following formula:

Break-even point = Fixed costs / (Sales price per unit - Variable cost per unit)

In this case, the sales price per unit is $15 and the variable cost per unit is $7. Therefore:

Break-even point = $560,000 / ($15 - $7)
Break-even point = $560,000 / $8
Break-even point = $70,000 units

To find the break-even point in sales dollars, we need to multiply the break-even point in units by the sales price per unit:

Break-even point in sales dollars = $70,000 x $15
Break-even point in sales dollars = $1,050,000

Therefore, the best choice is B.

Chase Company's New Product Is Expected to Have a Sales