Tim Marlow, the owner of The Clock Works, wanted to know how many clocks he must sell in order to cover his fixed cost at a given price.Tim knew that he had a fixed cost of $20,000 for equipment, taxes, and a bank loan.He also had a unit variable cost of $20 per clock for labor, and materials.If the price Tim charges for each of his clocks is $40, what is his break-even point quantity?
A)10 clocks
B)100 clocks
C)1,000 clocks
D)10,000 clocks
E)cannot be determined from the information provided

Question

Quizplus · Accepted Answer

The break-even point is calculated by dividing the fixed costs by the difference between the selling price per unit and the variable cost per unit. Here, it is $20,000 / ($40 - $20) = 1,000 clocks.

Tim Marlow, the Owner of the Clock Works, Wanted to Know