Question

A company's fixed operating costs are $370,000, its variable costs are $3.25 per unit, and the product's sales price is $5.65. What is the company's break-even point; that is, at what unit sales volume will its income equal its costs? Round your answer to the nearest whole number.

Answer 1

$154,167

Step-by-step explanation:

Break even point = where profit and loss = 0

so:

Fixed operating costs + (variable costs per unit × Units produced) = sales price × Units produced

$370,000 + ($3.25 × Units produced) = $5.65 × Units produced

$370,000 = $2.4 × Units produced

Units produced = $154,167

So company must produce $154,167 units to make it break even point.