Question

Belle Corp. has a selling price of $50 per unit, variable costs of $40 per unit, and fixed costs of $100,000. What sales revenue is needed to break-even?

A) $50,000
B) $100,000
C) $150,000
D) $200,000

Answer 1

To break-even, Belle Corp. needs to generate a sales revenue of $500,000.

Step-by-step explanation:

To calculate the sales revenue needed to break-even, we need to consider the fixed costs, variable costs, and selling price. The break-even point is the quantity at which the total revenue equals total costs. Let's calculate:

Fixed costs = $100,000

Variable costs per unit = $40

Selling price per unit = $50

Break-even quantity = Fixed costs / (Selling price per unit - Variable costs per unit)

Break-even quantity = $100,000 / ($50 - $40) = $100,000 / $10 = 10,000 units

Therefore, the sales revenue needed to break-even is $50 per unit multiplied by 10,000 units, which equals $500,000.