EKA manufacturing company produces part #2206 for the aerospace industry. Each unit of part #2206 is sold for $15. The unit production cost of part #2206 is $3. The fixed monthly cost of operating the production facility is $3000. How many units of part #2206 have to be sold in a month to break even?
A) 166.67
B) 200
C) 250
D) 500

Question

Quizplus · Accepted Answer

To break even, the total revenue must equal the total costs. The revenue per unit is $15, and the cost per unit is $3, with fixed costs of $3000. The break-even point is calculated as fixed costs divided by the contribution margin per unit ($15 - $3 = $12). Thus, $3000 / $12 = 250 units.

EKA Manufacturing Company Produces Part #2206 for the Aerospace Industry