In order to compute the breakeven point, a manager needs to know the unit price of the product being sold, the variable cost per unit, and __________.
A) total number of units sold
B) manufacturing costs per unit
C) total fixed costs
D) total variable costs
E) total manufacturing costs

Question

Quizplus · Accepted Answer

The breakeven point is the level of sales at which total revenue equals total costs. In order to calculate this point, the manager needs to know not only the unit price and variable cost per unit, but also the total fixed costs, which are the costs that do not vary with the level of production. Only choice C, total fixed costs, represents this necessary piece of information. The other choices, such as total variable costs or manufacturing costs per unit, are important factors in determining profitability or cost structure, but are not directly related to the breakeven point.

In Order to Compute the Breakeven Point, a Manager Needs