Fabricators, Inc. wants to increase capacity by adding a new machine. The fixed costs for machine A are $90,000, and its variable cost is $15 per unit. The revenue is $21 per unit. The break-even point for machine A is
A) $90,000 dollars
B) 90,000 units
C) $15,000 dollars
D) 15,000 units
E) cannot be calculated from the information provided

Question

Quizplus · Accepted Answer

To calculate the break-even point, we need to find the number of units needed to cover the fixed costs plus variable costs, which is then equal to the total revenue. 
Let X be the number of units needed to break even.

90,000 + 15X = 21X 
90,000 = 6X 
X = 15,000

Therefore, the break-even point for machine A is 15,000 units.