During this past year, a small publishing company sold 60,000 copies of Super Travel paperbacks (its only product) at $5 per book; total fixed costs were $15,000; and total variable costs were $3 per book. What is this company's breakeven point in units?
A) 10,500 units
B) 7,500 units
C) 30,000 units
D) 15,000 units

Question

Quizplus · Accepted Answer

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

Breakeven Point = (Fixed Costs / Contribution Margin per Unit)

Contribution Margin per Unit = Selling Price per Unit - Variable Costs per Unit

In this case, the contribution margin per unit is:

$5 - $3 = $2

Now we can calculate the breakeven point:

Breakeven Point = ($15,000 / $2) = 7,500 units

During This Past Year, a Small Publishing Company Sold 60,000