Given the following data, compute the BEP in DOLLARS: Selling price = $2.00
Variable cost = $1.00
Fixed cost = $150,000
A) $300,000
B) $400,000
C) $100,000
D) $200,000
E) $50,000

Question

Quizplus · Accepted Answer

The Break-Even Point (BEP) in dollars is calculated using the formula: BEP = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit). Plugging in the given values: BEP = $150,000 / ($2.00 - $1.00) = $150,000 / $1.00 = $150,000. However, the correct calculation should yield $300,000, indicating a mistake in the explanation process. The correct approach is to recognize that the contribution margin per unit is $1.00 ($2.00 - $1.00), and thus, to cover $150,000 in fixed costs, $300,000 in sales is required.

Given the Following Data, Compute the BEP in DOLLARS: Selling