A company's product sells at $12 per unit and has a $5 per unit variable cost. The company's total fixed costs are $98,000. The break-even point in units is:
A) 7,000.
B) 14,000.
C) 5,158.
D) 19,600.
E) 8,167.

Question

Quizplus · Accepted Answer

The break-even point in units is calculated by dividing the total fixed costs by the contribution margin per unit. The contribution margin per unit is the selling price per unit minus the variable cost per unit, which is $12 - $5 = $7. Therefore, the break-even point is $98,000 / $7 = 14,000 units.

A Company's Product Sells at $12 Per Unit and Has