Reynold's Grocery has fixed costs of $350,000, the unit selling price is $29, and the unit variable costs are $20. What are the break-even sales in units (rounded to a whole number) if the variable costs are decreased by $4?
A) 26,923 units
B) 12,069 units
C) 21,875 units
D) 38,889 units

Question

Quizplus · Accepted Answer

Break-even point can be calculated as follows:
Break-even point (in units) = Fixed costs / (Price - Variable costs)
Given: 
Fixed costs = $350,000 
Price = $29 
Variable costs = $20 - $4 = $16

Substituting the values, we get:
Break-even point (in units) = $350,000 / ($29 - $16) = 26,923 units (rounded to the nearest whole number)

Therefore, the best choice is A since it is the only option that matches the calculated break-even point.

Reynold's Grocery Has Fixed Costs of $350,000, the Unit Selling