SileCuatro has produced 22,000 tins in a year. The pretax operating cash flow (EBITDA) break-even point is 22,000 tins. If the fixed costs for the product is $1,500,000 and the variable cost per tin is $298, then what price can SileCuatro charge per tin if the firm needs to break even on a pretax operating cash flow basis? (Round to nearest whole dollar.)
A) $366
B) $298
C) $268
D) $372

Question

Quizplus · Accepted Answer

The correct answer is A.The price per tin can be calculated using the following formula:Price per tin = (Fixed costs + Variable cost per tin) / Break-even point in unitsPrice per tin = ($1,500,000 + $298) / 22,000Price per tin = $1,798,000 / 22,000Price per tin = $366

SileCuatro Has Produced 22,000 Tins in a Year