Assume total fixed costs of $160,000,variable costs per

Question

Quizplus · Accepted Answer

To calculate the breakeven point, we need to use the formula:

Breakeven Point = Total Fixed Costs / (Price - Variable Cost per unit)

Using the information given in the question, we can calculate the breakeven point for each option:

Option A: $160,000 / ($25 - $20) = 35,000 units 
Option B: $160,000 / ($30 - $22) = 10,000 units 
Option C: $160,000 / ($28 - $22) = 32,000 units 
Option D: $160,000 / ($27 - $22) = 32,000 units

Option B has the lowest breakeven point, which means it is the best choice. The other options have higher breakeven points, which means they will require higher sales volumes to cover the fixed costs and start generating profits.

Assume Total Fixed Costs of $160,000,variable Costs Per