Elizabeth bought a worm farm. She plans to sell small cartons of worms for $4 each. Her fixed costs are $2,500, and her variable costs for each carton sold are $1.50. How many small cartons of worms does Elizabeth need to sell to break-even?

Question

Quizplus · Accepted Answer

To break-even, Elizabeth's total revenue must equal her total costs. The break-even point in units is calculated as Fixed Costs / (Selling Price per Unit - Variable Cost per Unit). Here, it is $2,500 / ($4 - $1.50) = 1000 cartons.

Elizabeth Bought a Worm Farm