Break-even analysis: Johnstone company wants to break even at 20,000 units on its only product. Its unit variable cost is $63.75, and its fixed cost is $742,000. What should be the company's unit selling price?

Question

Quizplus · Accepted Answer

To break even, total revenue must equal total costs. The break-even point in units is given by fixed costs divided by the difference between selling price and variable cost. Solving for the selling price: $742,000 / (20,000) + $63.75 = $100.85.

Break-Even Analysis: Johnstone Company Wants to Break Even at 20,000