Question

Jane Corporation produces model cars. Each sells for $26.93. The variable cost per unit is $14.15, with a fixed cost of $318,222. What is the break-even point of Jane Corporation?

a. 20,000 units
b. 10,000 units
c. 15,000 units
d. 25,000 units

Answer 1

The break-even point of Jane Corporation is approximately 20,134 units.

Step-by-step explanation:

To calculate the break-even point, we need to find the quantity of units at which the total revenue equals the total cost. Total revenue is calculated by multiplying the selling price per unit ($26.93) by the quantity of units. Total cost is the sum of fixed cost and variable cost per unit multiplied by the quantity of units. Let's do the calculations.

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

Break-even point = $318,222 / ($26.93 - $14.15)

Break-even point is approximately 20,134 units. Therefore, the correct answer is a. 20,000 units.