Cando Manufacturing makes lamps that retail at $200 each. The unit variable cost is $120, and the fixed costs are $720,000 per year. Cando can produce a maximum of 2,000 lamps per month. What is the break-even volume per month?

Question

Quizplus · Accepted Answer

The break-even volume is the number of units that must be sold to cover the fixed costs. The formula for break-even volume is:Break-even volume = Fixed costs / (Unit selling price - Unit variable cost)In this case, the fixed costs are $720,000, the unit selling price is $200, and the unit variable cost is $120. Plugging these values into the formula, we get:Break-even volume = $720,000 / ($200 - $120) = 750 lampsTherefore, the break-even volume is 750 lamps per month.

Cando Manufacturing Makes Lamps That Retail at $200 Each