Payton Industries has fixed costs of $490,000,the unit selling price is $35,and the unit variable costs are $20.What is the break-even sales (units)if fixed costs are reduced by $40,000?

Question

Quizplus · Accepted Answer

To calculate the break-even point in units, we use the formula:

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

Using the original numbers, we get:

Break-even point = $490,000 / ($35 - $20) = 32,667 units

If fixed costs are reduced by $40,000, the new fixed cost is $450,000. Plugging this into the formula, we get:

Break-even point = $450,000 / ($35 - $20) = 30,000 units

Therefore, the answer is C, 30,000 units.

Payton Industries Has Fixed Costs of $490,000,the Unit Selling Price