Stanley Company manufactures and sells one product for $200 per unit. The variable costs per unit are $140, and monthly total fixed costs are $7,500. Last month Stanley sold 100 units and expects sales to remain the same for the current month. If fixed costs increase by $1,500, what is the break-even point for the current month?

Question

Quizplus · Accepted Answer

The contribution margin per unit is $200 - $140 = $60.

To break even, the total contribution margin must equal the total fixed costs:

$60Q = $7,500 + $1,500

$60Q = $9,000

Q = 150

Therefore, Stanley must sell 150 units to break even, which at a selling price of $200 per unit, results in total sales of $30,000. Therefore, the correct answer is C.

Stanley Company Manufactures and Sells One Product for $200 Per