If a product sells for $8,variable costs are $6 and fixed costs are $150,000,what would total sales have to be in order to break-even?

Question

Quizplus · Accepted Answer

To break-even, the total revenue must equal the total costs.

Total Costs = Fixed Costs + Variable Costs

Total Costs = $150,000 + ($6 * X)

Total Revenue = Price * Quantity

$8X = Total Revenue

To break-even, Total Revenue = Total Costs

$8X = $150,000 + ($6 * X)

$8X - $6X = $150,000

$2X = $150,000

X = $75,000

Now that we know that X = $75,000, we can calculate the total sales needed to break-even:

Total Revenue = Price * Quantity

Total Revenue = $8 * $75,000

Total Revenue = $600,000

Therefore, the answer is C) $600,000.

If a Product Sells for $8,variable Costs Are $6 and Fixed