Fabricators,Inc.wants to increase capacity by adding a new machine.The fixed costs for machine A are $90,000,and its variable cost is $15 per unit.The revenue is $21 per unit.What is the break-even point for machine A?
A)$90,000 dollars
B)90,000 units
C)$15,000 dollars
D)15,000 units
E)4,286 units

Question

Quizplus · Accepted Answer

The break-even point can be calculated as follows:
Break-even point = Fixed cost / (Price per unit - Variable cost per unit)
Break-even point = $90,000 / ($21 - $15) per unit
Break-even point = $90,000 / $6 per unit
Break-even point = 15,000 units
Therefore, the break-even point for machine A is 15,000 units. Choice D is the correct answer.