Krazy Key Chains sell for $1.00 each. If variable costs are $0.50 each and total fixed costs are $2,500, how many key chains must be sold to break even?
A) 5,000
B) 10,000
C) 2,500
D) 1,500
E) 2,367

Question

Quizplus · Accepted Answer

To break even, total revenue must equal total costs (fixed + variable). The contribution margin per key chain is $1.00 - $0.50 = $0.50. To cover the fixed costs of $2,500, you need to sell $2,500 / $0.50 = 5,000 key chains.

Krazy Key Chains Sell for $1