EKA manufacturing company produces part #2206 for the aerospace industry. The unit production cost of part #2206 is $3. The fixed monthly cost of operating the production facility is $3000. Next month's demand for part #2206 is 200 units. How much should the company charge for each unit of part #2206 to break even?
A) $12
B) $15
C) $18
D) $20

Question

Quizplus · Accepted Answer

The total cost of producing 200 units is $3000 (fixed cost) + 200 x $3 (unit production cost) = $3600. To break even, the company must charge $3600 / 200 = $18 per unit.

EKA Manufacturing Company Produces Part #2206 for the Aerospace Industry