Bakewell Inc. wants to increase capacity by adding a new oven to their existing facility. The fixed costs for the Viking 2000 oven are $80,000, and its variable cost is $25 per unit. The revenue is $30 per unit. The break-even point for the Viking 2000 is
A) 3,200 units
B) 2,666.67 units
C) 1,454.55 units
D) 16,000 units

Question

Quizplus · Accepted Answer

The break-even point is calculated by dividing the fixed costs by the difference between revenue per unit and variable cost per unit: $80,000 / ($30 - $25) = 16,000 units.