William Clark wants to know his breakeven point. His selling price is $20 per unit, his fixed costs are $6,000, and the variable costs per unit are $6. What is his breakeven quantity?
A) 430 units
B) 428.6 units
C) 300 units
D) 425.6 units
E) 50 units

Question

Quizplus · Accepted Answer

The breakeven point in units can be calculated using the formula: Breakeven Point = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit). Plugging in the given values: $6,000 / ($20 - $6) = $6,000 / $14 = 428.57 units. Since the breakeven quantity must be a whole number, it's rounded to 428.6 units for the purpose of this calculation, but in practical scenarios, you would need to sell 429 units to fully cover the fixed costs.

William Clark Wants to Know His Breakeven Point