How many total dollars of sales must BAC Company sell to break even if the selling price per unit is $8.50, variable costs are $4.00 per unit, and fixed costs are $9,000?
A) $4,000
B) $8,500
C) $9,000
D) $17,000

Question

Quizplus · Accepted Answer

To break even, the total revenue must equal the total cost. The total cost is the sum of fixed costs and variable costs, which is expressed as:

Total Cost = (Variable Cost per unit × Number of units) + Fixed Cost

Let X be the number of units that must be sold to break even. Then, we have:

Total Revenue = Selling Price per unit × Number of units = $8.50X

Total Cost = (Variable Cost per unit × Number of units) + Fixed Cost = $4.00X + $9,000

Setting Total Revenue equal to Total Cost, we get:

$8.50X = $4.00X + $9,000

Solving for X, we have:

$4.50X = $9,000

X = $9,000 ÷ $4.50 = 2,000 units

Thus, the company must sell 2,000 units to break even. The total revenue required to sell 2,000 units is:

Total Revenue = Selling Price per unit × Number of units = $8.50 × 2,000 = $17,000

Therefore, the answer is D: $17,000.

How Many Total Dollars of Sales Must BAC Company Sell