Larsen Films' is analyzing its cost structure.Its fixed operating costs are $470,000, its variable costs of $2.80 per unit produced, and its products sell for $4.00 per unit.What is the company's breakeven point, i.e., at what unit sales volume would income equal costs?
A) 391,667
B) 411,250
C) 431,813
D) 453,403
E) 476,073

Question

Quizplus · Accepted Answer

The breakeven point in units can be calculated using the formula: Breakeven Point (units) = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit). Plugging in the given numbers: $470,000 / ($4.00 - $2.80) = $470,000 / $1.20 = 391,666.67 units. Rounding to the nearest whole unit gives 391,667 units.

Larsen Films' Is Analyzing Its Cost Structure