Capital One produces a single product,which it sells for $8.00 per unit.Variable costs per unit equal $3.20.The company expected total short-term fixed costs to be $7,200 for the coming month,at the projected sales level of 20,000 units.Management is considering several alternative actions designed to improve operating results.In conjunction with this,they have created a profit-planning model,which can be used to evaluate different scenarios.
What is the current break-even point in terms of number of units for the month?

Question

Quizplus · Accepted Answer

The current break-even point can be calculated by using the formula:

Break-even point (units) = Fixed costs / (Price per unit - Variable costs per unit)

Fixed costs = $7,200
Price per unit = $8.00
Variable costs per unit = $3.20

Substituting the values, we get:

Break-even point (units) = $7,200 / ($8.00 - $3.20)
                        = 1,500 units

Therefore, the current break-even point in terms of number of units for the month is 1,500 units.

As the question does not specify the alternatives being considered, it is not possible to provide the best choice(s) with an explanation.

Capital One Produces a Single Product,which It Sells for $8