Jenna Manufacturers produces flooring material. The monthly fixed costs are $10,000 per month. The unit selling price is $75 and variable cost per unit is $35. If Jenna's managers create a CVP graph from volume levels of zero to 500 units, at what sales level (in units)will the revenue and total cost lines intersect?

Question

Quizplus · Accepted Answer

The break-even point is where total revenue equals total costs. The formula for break-even point in units is Fixed Costs / (Selling Price per Unit - Variable Cost per Unit). Here, it is $10,000 / ($75 - $35) = 250 units.

Jenna Manufacturers Produces Flooring Material