Baker Company sells its product for £60. In addition, it has a variable cost ratio of 40 percent and total fixed costs of £9,000. What is the break-even point in units for Baker Company?
A) 375 units
B) 3,600 units
C) 250 units
D) 2,400 units

Question

Quizplus · Accepted Answer

To calculate the break-even point, we need to use the formula:
Break-even point (in units) = Total fixed costs / (Price per unit - Variable cost per unit)

In this case, we have:
Price per unit = £60
Variable cost ratio = 40%
Variable cost per unit = (40% x £60) = £24
Total fixed costs = £9,000

So, the break-even point (in units) = £9,000 / (£60 - £24) = 250 units.
Therefore, the best choice is C) 250 units.

Baker Company Sells Its Product for £60