Santa Fe Production sells a single product to wholesalers. The company's budget for the upcoming year revealed anticipated unit sales of 31,600, a selling price of $20, variable cost per unit of $8, and total fixed costs of $360,000. If Santa Fe's unit sales are 300 units more than anticipated, its break-even point will:

Question

Quizplus · Accepted Answer

The break-even point is determined by fixed costs and the contribution margin per unit (selling price - variable cost per unit), not by the number of units sold. Therefore, if unit sales increase, it does not affect the calculation of the break-even point, which remains constant as long as fixed costs and the contribution margin per unit remain the same.

Santa Fe Production Sells a Single Product to Wholesalers