The MoneyTalks company produces and sells 125,000 units a year for £50 each.Variable costs are £40 and annual fixed costs are £600,000.
Calculate the break-even point in sales revenue.

Question

Quizplus · Accepted Answer

To calculate the break-even point, we need to use the formula:

Break-even point (in units) = Fixed costs / (Selling price per unit - Variable costs per unit)

In this case, the selling price per unit is £50, and the variable costs per unit are £40. Therefore,

Break-even point (in units) = £600,000 / (£50 - £40) = 60,000 units

To find the break-even point in sales revenue, we can multiply the break-even point in units by the selling price per unit:

Break-even point (in sales revenue) = 60,000 units x £50 = £3,000,000

Therefore, the correct answer is C.

The MoneyTalks Company Produces and Sells 125,000 Units a Year