Break-even analysis: Johnstone Corp. 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 / (Selling Price - Variable Cost). Solving for the selling price: $742,000 / (Selling Price - $63.75) = 20,000. Solving this equation gives a selling price of $100.85.

Break-Even Analysis: Johnstone Corp