Question

Beaver Corporation has fixed costs of $90,000; a unit selling price of $25; and a unit variable cost of $15. The break-even point for Beaver is ___units.

A) 2,250 units
B) 3,600
C) 6,000
D) 9,000
E) none of the above

Answer 1

The break-even point for Beaver Corporation is D)9,000 units.

Step-by-step explanation:

To find the break-even point, we need to determine the quantity of units that will cover the fixed costs and variable costs without making any profit or loss. The break-even point can be calculated using the following formula:

Break-even point (in units) = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit)

For Beaver Corporation, the fixed costs are $90,000, the selling price per unit is $25, and the variable cost per unit is $15. Substituting these values into the formula:

Break-even point = $90,000 / ($25 - $15) = $90,000 / $10 = 9,000 units

Therefore, the break-even point for Beaver Corporation is 9,000 units.