Payton Industries has fixed costs of $490,000, the unit selling price is $35, and the unit variable costs are $20. What are the break-even sales (units) if fixed costs are reduced by $40,000?

Question

Quizplus · Accepted Answer

To calculate the break-even sales (units), we can use the formula:

Break-even units = Fixed costs / (Selling price per unit - Variable costs per unit)

Using the original values:

Break-even units = $490,000 / ($35 - $20) = 32,667 units

To find the break-even sales (units) with the reduced fixed costs of $450,000:

Break-even units = $450,000 / ($35 - $20) = 30,000 units

Therefore, the answer is C, 30,000 units.

Payton Industries Has Fixed Costs of $490,000, the Unit Selling