Shenandoah Company
Shenandoah Company is considering the introduction of a new product with the following price and cost characteristics

The company expects to sell 2,000 units for the year.
Refer Shenandoah Company.How many units must be sold to break even?
A)900
B)2,250
C)2,000
D)1,500

Question

Shenandoah Company
Shenandoah Company is considering the introduction of a new product with the following price and cost characteristics

The company expects to sell 2,000 units for the year.
Refer Shenandoah Company.How many units must be sold to break even?
A)900 
B)2,250 
C)2,000 
D)1,500

Quizplus · Accepted Answer

To calculate the break-even point, we need to find the number of units that will generate enough sales revenue to cover the total cost.

Break-even point = Fixed Costs / (Unit price - Variable Costs per unit)
Fixed costs = $10,000
Unit price = $50
Variable costs per unit = $30
Break-even point = $10,000 / ($50 - $30) = 500 units

As the company expects to sell 2,000 units, the break-even point is already covered. However, to determine the exact number of units required to break even, we can use the above formula, which gives 1,500 units. Therefore, the best choice is D.

Shenandoah Company Shenandoah Company Is Considering the Introduction of a New Product