Pandecker, Inc., estimates the variable costs of producing one unit to be $11.26. The company plans to produce 26,500 units. The fixed costs the company expects to incur are $82,770. What is Pandecker's break-even selling price?
A)$14.38
B)$35.17
C)$11.26
D)$3.12

Question

Quizplus · Accepted Answer

To find the break-even selling price, we need to calculate the total cost and divide it by the number of units produced, then add the variable cost per unit.

Total cost = fixed cost + (variable cost per unit x number of units)

Total cost = $82,770 + ($11.26 x 26,500)

Total cost = $82,770 + $298,090

Total cost = $380,860

Break-even selling price = total cost / number of units + variable cost per unit

Break-even selling price = $380,860 / 26,500 + $11.26

Break-even selling price = $14.38

Therefore, the break-even selling price is $14.38, so the best choice is A.