Skyline Corp.has a selling price of $25 per unit,variable costs of $20 per unit,and fixed costs of $25,000.What sales revenue is needed to break-even?
A)$100,000
B)$5,000
C)$125,000
D)$50,000

Question

Quizplus · Accepted Answer

To break-even, the total revenue earned should be equal to the total cost incurred. 
Total Cost = Fixed Cost + Variable Cost per Unit x Number of Units
Total Cost = $25,000 + $20 x Number of Units

At break-even point, total revenue earned = Total Cost
Selling Price per Unit x Number of Units = Total Cost
$25 x Number of Units = $25,000 + $20 x Number of Units
$5 x Number of Units = $25,000
Number of Units = 5,000

Sales Revenue = Selling Price per Unit x Number of Units
Sales Revenue = $25 x 5,000
Sales Revenue = $125,000

Therefore, the best choice is C.