At Quebec Corp., selling price is $200 per unit. Fixed costs are $2,000,000 and expected contribution margin is 40%. If the company breaks even at this point, what is the break-even point in units?

Question

Quizplus · Accepted Answer

The break-even point in units is calculated by dividing the total fixed costs by the contribution margin per unit. The contribution margin per unit is 40% of the selling price, which is $200 * 0.40 = $80. Therefore, the break-even point in units is $2,000,000 / $80 = 25,000 units.