Benkart's Tire Store has fixed costs of $220,000.Tires sell for $95 each and have a unit variable cost of $45.What is Benkart's break-even point in units?

Question

Quizplus · Accepted Answer

First, we need to find the contribution margin per unit, which is the selling price minus the unit variable cost:

Contribution margin per unit = $95 - $45 = $50

Next, we can use the formula for break-even point in units:

Break-even point (units) = Fixed costs ÷ Contribution margin per unit

Plugging in the values, we get:

Break-even point (units) = $220,000 ÷ $50 = 4,400

Therefore, the best choice is B, with a break-even point of 4,400 units.

Benkart's Tire Store Has Fixed Costs of $220,000