The new Corina watch has an expected selling price per watch of $42, the projected variable cost per unit is $24, and estimated fixed costs per month are $24,120. The breakeven point in watches per month is
A) 1,115 watches.
B) 1,590 watches.
C) 1,340 watches.
D) 1,780 watches.

Question

Quizplus · Accepted Answer

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

Breakeven Point = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit)

Plugging in the given values:

Breakeven Point = $24,120 / ($42 - $24) = 1,340 watches

Therefore, the best choice is C) 1,340 watches. This is the number of watches that the company needs to sell in order to cover its fixed costs and break even. Any sales beyond this point will generate profit for the company.

The New Corina Watch Has an Expected Selling Price Per