Use the breakeven model to determine which of the statements below is TRUE according to the information provided in the table relating to two different locations considered for a new manufacturing facility.LOCATION ANNUAL FIXED COSTS
UNIT VARIABLE COSTS
Site A
$50,000
$10
Site B
$20,000
$30
A)Site A is the desired location if the production rate is 1000 units per year
B)The breakeven point for these two locations is 1500 units per year
C)Site B is the desired location if the production rate is 2000 units per year
D)The breakeven point for these two locations is 500 units per year

Question

Quizplus · Accepted Answer

The breakeven point is calculated by setting the total costs of both sites equal: $50,000 + $10x = $20,000 + $30x. Solving for x gives 1500 units.

Use the Breakeven Model to Determine Which of the Statements