Crabapple Candies has fixed costs of $1,000, variable costs of $1 per candy, and price per unit of $4 per candy. How many candies does it need to sell to ensure it breaks even?
A) 333
B) 1,000
C) 250
D) 200
E) 334

Question

Quizplus · Accepted Answer

To break even, Crabapple Candies needs to cover its fixed costs through the profit it makes on each candy. The profit per candy is the price per unit minus the variable cost, which is $4 - $1 = $3 per candy. To cover the fixed costs of $1,000, the company needs to sell $1,000 / $3 = 333.33 candies. Since they can't sell a fraction of a candy, they need to sell 334 candies to break even.

Crabapple Candies Has Fixed Costs of $1,000, Variable Costs of $1