The Venue Racquet Club found that with annual fixed costs of $60,000, its breakeven point is 2,000 members when the membership charge is $60 per person per year. What is the variable cost per person for Venue?
A)$45
B)$50
C)$30
D)$25
E)$40

Question

Quizplus · Accepted Answer

The breakeven point in units (members in this case) is calculated by dividing the fixed costs by the contribution margin per unit. The contribution margin per unit is the selling price per unit minus the variable cost per unit. Given that the breakeven point is 2,000 members and the fixed costs are $60,000, we can set up the equation $60,000 = 2,000 * ($60 - Variable Cost). Solving for the variable cost gives us $30 as the variable cost per person.

The Venue Racquet Club Found That with Annual Fixed Costs