T-shirts Unlimited is conducting a breakeven analysis on unbleached cotton tops. Fixed costs are $100,000 and the per-unit contribution to fixed costs is $20. To break even, the company must sell ______ units.
A) 20,000
B) 5,000
C) 500
D) 200

Question

Quizplus · Accepted Answer

To calculate the breakeven point, we divide the fixed costs by the per-unit contribution to fixed costs:

Breakeven Point = Fixed Costs / Per-unit Contribution to Fixed Costs 
Breakeven Point = $100,000 / $20 per unit 
Breakeven Point = 5,000 units

Therefore, the company must sell 5,000 units to break even.

T-Shirts Unlimited Is Conducting a Breakeven Analysis on Unbleached Cotton