Strayer has a break-even point of 120,000 units. If the firm's sole product sells for $40 and fixed costs total $480,000, the variable cost per unit must be:

Question

Quizplus · Accepted Answer

The break-even point in units is calculated as Fixed Costs / (Selling Price per Unit - Variable Cost per Unit). Given the break-even point is 120,000 units, selling price is $40, and fixed costs are $480,000, we can set up the equation: 120,000 = 480,000 / (40 - Variable Cost). Solving for the variable cost gives $36.

Strayer Has a Break-Even Point of 120,000 Units