Assume that Rose Company sold 15,000 units to break even this period. Each unit sells for $100. The variable cost per unit is $65. What were fixed costs for the period?

Question

Quizplus · Accepted Answer

To break even, sales revenue must equal total costs, and we can set up the equation as follows:

Sales revenue = Total costs
$100/unit * 15,000 units = $65/unit * 15,000 units + Fixed costs

Solving for fixed costs, we get:

Fixed costs = $100/unit * 15,000 units - $65/unit * 15,000 units
Fixed costs = $1,500,000 - $975,000
Fixed costs = $525,000

Therefore, the fixed costs for the period were $525,000 (Choice B).

Assume That Rose Company Sold 15,000 Units to Break Even