The total fixed cost of production in a manufacturing company is $50,000.The company sells its products at $15 and the variable costs associated with each unit sold is $10.Calculate the level of production at which the firm breaks even.
A)15,000 units
B)10,000 units
C)5,000 units
D)1,000 units
E)20,000 units

Question

Quizplus · Accepted Answer

To calculate the break-even point in units, use the formula: Break-even point in units = Total Fixed Costs / (Selling Price per Unit - Variable Cost per Unit). Plugging in the given values: $50,000 / ($15 - $10) = $50,000 / $5 = 10,000 units.

The Total Fixed Cost of Production in a Manufacturing Company