Liam Rutherford is the owner of a company that manufactures metal doors that are utilized by retail outlets in shopping malls or higher crime areas where the retailer wants to provide additional security to prevent break-ins. Liam is developing a new model that provides greater metal strength, is lighter, and is more attractive when in a closed position. He's interested in determining the breakeven point in order to establish minimum goals for the first month of production. Liam estimates that his fixed costs to produce the new model will be $60,000. He plans to sell the doors to retailers at a list price of $249. Variable costs are estimated to be $95. How many units will his business need to sell in order to reach the breakeven point?
A)390 units
B)337 units
C)241 units
D)632 units

Question

Quizplus · Accepted Answer

The breakeven point is the point at which total revenue equals total costs. To calculate the breakeven point, we can use the following formula:Breakeven point = Fixed costs / (Selling price per unit - Variable cost per unit)Plugging in the given values, we get:Breakeven point = $60,000 / ($249 - $95) = 390 unitsTherefore, Liam's business will need to sell 390 units in order to reach the breakeven point.

Liam Rutherford Is the Owner of a Company That Manufactures