A company currently breaks even at 1,000 units.Its fixed costs are $40,000 and its variable costs are $10 per unit.What is the product's selling price per unit?
A)$100
B)$ 50
C)$ 35
D)$ 25

Question

Quizplus · Accepted Answer

The break-even point is reached when total revenue equals total costs. The formula to calculate the break-even point in units is Fixed Costs / (Selling Price per Unit - Variable Cost per Unit). Given that the company breaks even at 1,000 units, with fixed costs of $40,000 and variable costs of $10 per unit, we can set up the equation $40,000 / (Selling Price - $10) = 1,000. Solving for the Selling Price gives us $40,000 / 1,000 + $10 = $40 + $10 = $50. Therefore, the selling price per unit is $50.

A Company Currently Breaks Even at 1,000 Units