Regina owns and operates the Regal Car Wash. She charges $12 per car wash. Her fixed costs are $850 per month, while her variable costs per car wash amount to $2. Regal Car Wash must service 60 cars to break even.

Question

Quizplus · Accepted Answer

The formula to determine a firm's break-even point in sales volume is as follows: BEP = total fixed costs/(price of one unit minus variable cost per unit). Using the information provided, BEP = $850/($12 - $2). The resulting answer is 85 cars.

Regina Owns and Operates the Regal Car Wash