Spruce Pine Mfg.Co.has total fixed costs of $300,000 a year.The owner estimates that average variable costs for its product will be about $30 next year.The selling price to wholesalers will be $50.The break-even point is
A)6,000 units.
B)10,000 units.
C)12,000 units.
D)15,000 units.
E)20,000 units.

Question

Quizplus · Accepted Answer

The BEP,in units,can be found by dividing total fixed costs (TFC)by the fixed-cost (FC)contribution per unit.The fixed-cost (FC)contribution per unit is the assumed selling price per unit minus the variable cost per unit.