Fox Company expects to sell 10,000 units of its product at a price of $20 per unit. The variable cost to produce a unit is $7, and the company has fixed operating costs of $10,000. The break-even units produced and sold is nearest to:
A) 76.92.
B) 500.
C) 769.23.
D) 10,000.

Question

Quizplus · Accepted Answer

The break-even point in units can be calculated using the formula: Break-even units = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit). Plugging in the given values: $10,000 / ($20 - $7) = $10,000 / $13 ≈ 769.23 units.

Fox Company Expects to Sell 10,000 Units of Its Product