Violet Company typically has $360,000 of fixed costs and $25 of variable costs per unit. Violet plans to sell 8,000 units this period. In order for Violet to break-even, what price should Violet charge per unit?

Question

Quizplus · Accepted Answer

To break-even, total revenue must equal total costs. Total costs = Fixed costs + (Variable cost per unit * Number of units) = $360,000 + ($25 * 8,000) = $560,000. To find the break-even price per unit, divide total costs by the number of units: $560,000 / 8,000 = $70.

Violet Company Typically Has $360,000 of Fixed Costs and $25