Question

Zhao company has fixed costs of $354,000. Its single product sells for $175 per unit, and variable costs are $116 per unit. Determine the break-even point in units.

A) 2,400 units
B) 3,000 units
C) 2,000 units
D) 2,100 units

Answer 1

The break-even point in units for Zhao company is 3,000 units.

Step-by-step explanation:

To determine the break-even point in units for Zhao company, we need to use the formula:

Break-even point (in units) = Fixed costs / (Selling price per unit - Variable cost per unit)

Substituting the given values, we get:

Break-even point (in units) = $354,000 / ($175 - $116) = 3,000 units

Therefore, the correct answer is Option B) 3,000 units.