Break-even point units: Ski & Surf manufactures snow boards. The firm has fixed costs of $1,090,275. The snow boards sell for $335 each and have a variable cost of $165 each. What is the pretax operating cash flow break-even point for Ski & Surf? (Round off to the nearest unit)

Question

Quizplus · Accepted Answer

The formula for calculating the break-even point in units is:

Break-even point (units) = Fixed costs / (Unit selling price – Unit variable costs)

Substituting the given values:

Break-even point (units) = $1,090,275 / ($335 – $165)
Break-even point (units) = $1,090,275 / $170
Break-even point (units) = 6,413 units (rounded off to the nearest unit)

Therefore, the answer is B, which is the closest option to 6,413.

Break-Even Point Units: Ski & Surf Manufactures Snow Boards