A company currently sells 10,000 units at $9/unit and makes $20,000 accounting profit.Variable costs currently stand at $6 per unit.By how much would variable costs have to increase before the company makes zero accounting profits?

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The company makes $20,000 accounting profit, which means total revenue minus total costs equals $20,000. Total revenue is 10,000 units * $9 = $90,000. Total costs are $90,000 - $20,000 = $70,000. Current variable costs are 10,000 units * $6 = $60,000. Fixed costs are $70,000 - $60,000 = $10,000. To make zero profit, total costs must equal total revenue, so variable costs must increase by $20,000. This means an increase of $20,000 / 10,000 units = $2.00 per unit.

A Company Currently Sells 10,000 Units at $9/unit and Makes