The variable cost of a new computer keyboard is $25 per unit, and the fixed costs to produce the keyboard are $20,000 per year. If the selling price of the keyboard is $45, how many units must the company sell to break even?
A) 800 units
B) 445 units
C) 2000 units
D) 1000 units
E) None of the above

Question

Quizplus · Accepted Answer

To break even, the total revenue must equal the total costs. The fixed costs are $20,000, and the variable cost per unit is $25. The selling price per unit is $45. The break-even point in units is calculated as: Fixed Costs / (Selling Price - Variable Cost) = $20,000 / ($45 - $25) = 1000 units.

The Variable Cost of a New Computer Keyboard Is $25