At the break-even point of 1,500 units, variable costs are $60,000, and fixed costs are $30,000. What would operating income be if 1,501 units are sold?

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Quizplus · Accepted Answer

At the break-even point, total costs (variable + fixed) equal total revenue, so there is no operating income. Selling one more unit (1,501st unit) generates additional revenue equal to the selling price per unit, which is the variable cost per unit ($60,000/1,500 = $40). Therefore, the operating income from selling the 1,501st unit is $40.

At the Break-Even Point of 1,500 Units, Variable Costs Are