Refer to Figure 8-8. Suppose Urban could reduce setup costs by £300 per setup and could reduce the number of engineering hours needed to 1,400 hours. How many units must be sold to break even in this case?
A)10,670 units
B)21,340 units
C)6,350 units
D)7,500 units

Question

Quizplus · Accepted Answer

The correct answer is A because the number of units that must be sold to break even is calculated as follows:Break-even point = (Fixed costs + Variable costs per unit) / Contribution margin per unitFixed costs = £1,000,000Variable costs per unit = £200Contribution margin per unit = £300Break-even point = (1,000,000 + 200) / 300 = 10,670 units