FifeSiete Corp. wants to break even at 15,000 units on its only product. Its unit variable cost is $55, and its fixed cost is $750,000. What should be the company's unit selling price?

Question

Quizplus · Accepted Answer

To break even at 15,000 units, the total cost must equal the total revenue.

Total cost = Fixed cost + (Variable cost per unit x Number of units)

$750,000 + ($55 x 15,000) = $1,575,000

So, to break even, the company must sell its 15,000 units for a total of $1,575,000.

Unit selling price = Total revenue / Number of units

Unit selling price = $1,575,000 / 15,000

Unit selling price = $105

Therefore, the company's unit selling price should be $105 to break even at 15,000 units.