Assume a fixed cost for a process of $10,000.The variable cost to produce each unit of product is $30,and the selling price for the finished product is $50.Ignoring inventory,how many units must the firm sell to break even?
A)200 units
B)300 units
C)400 units
D)500 units
E)600 units

Question

Quizplus · Accepted Answer

To break even, the total revenue must equal the total costs. The fixed cost is $10,000, and the variable cost per unit is $30. The selling price per unit is $50, so the contribution margin per unit is $50 - $30 = $20. The break-even point in units is calculated as fixed costs divided by the contribution margin per unit: $10,000 / $20 = 500 units.

Assume a Fixed Cost for a Process of $10,000