Eunice buys a worm farm. She plans to sell a small carton of worms to people who want to fish for $3. Her fixed costs are $1,201, and her variable cost for each carton sold is $.75. How many cartons of worms does Eunice need to sell to reach her break-even quantity?

Question

Quizplus · Accepted Answer

Break-even quantity = Total fixed costs/(actual unit sales price - unit variable cost) = 1201/(3 - .75) = 1201/2.25 = 533.78 = 534 cartons. The break-even point quantity is the quantity at which total revenue equals total cost, and then profit occurs for additional sales.

Eunice Buys a Worm Farm