A firm has fixed operating costs of $525,000. The sales price per unit is $35 and its variable costs per unit is $22.50. The firm's operating breakeven point in units is ________.
A) $23,330
B) $32,000
C) $42,000
D) $52,000

Question

Quizplus · Accepted Answer

Operating Breakeven Point (units) = Fixed Costs / contribution margin per unit

Contribution Margin = Sales Price per unit - Variable Cost per unit

Contribution Margin = $35 - $22.50 = $12.50

Operating Breakeven Point (units) = $525,000 / $12.50 per unit = 42,000 units

A Firm Has Fixed Operating Costs of $525,000