A new product that will sell for $75.00 has variable costs of $38.00 per unit.Fixed costs of $75,000 must be incurred every year to manufacture this product.What is the annual volume to break even?
A)fewer than 1500 units.
B)1500 to 1749 units.
C)1750 to 1999 units.
D)2000 units or more.

Question

Quizplus · Accepted Answer

To find the break-even point, use the formula: Break-even volume = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit). Here, it is $75,000 / ($75 - $38) = $75,000 / $37 = 2027 units. Therefore, the break-even volume is 2000 units or more.

A New Product That Will Sell for $75