A firm has fixed operating costs of $25,000, a per unit sales price of $5, and a variable cost per unit of $3. What is its operating breakeven point if it desires net operating income of $10,000, not $0 (zero)?
A) 12,500 units
B) 15,000 units
C) 17,500 units
D) 25,000 units

Question

Quizplus · Accepted Answer

To achieve a net operating income of $10,000, the firm needs to cover both its fixed costs and the desired income. The breakeven point in units is calculated as (Fixed Costs + Desired Income) / (Sales Price per Unit - Variable Cost per Unit) = ($25,000 + $10,000) / ($5 - $3) = 17,500 units.

A Firm Has Fixed Operating Costs of $25,000, a Per