Excel hardware is introducing a new product on a new product line of capacity 800 units per week at a production cost of $50 per unit. Fixed costs are $22,400 per week. Variable selling and shipping costs are estimated to be $20 per unit. Excel plan to market the new product at $110 per unit. What is the break-even capacity per week?
A) 204
B) 373
C) 560
D) 280
E) 320

Question

Quizplus · Accepted Answer

The break-even point is calculated by dividing the total fixed costs by the contribution margin per unit (selling price per unit minus variable costs per unit). Here, the contribution margin is $110 - ($50 + $20) = $40. The break-even point is $22,400 / $40 = 560 units.

Excel Hardware Is Introducing a New Product on a New