Question

A company manufactures and sells a product for $111 per unit. The company's fixed costs are $74,460, and its variable costs are $81 per unit. The company's break-even point in units is:

Multiple Choice
a. 671.
b. 919.
c. 750.
d. 2,482 .
e. 388.

Answer 1

D

Step-by-step explanation:

To calculate the break-even point in units, we need to determine the number of units that need to be sold to cover the fixed costs and variable costs without making a profit or incurring a loss.

The formula for calculating the break-even point in units is:

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

Given the following values:

Selling price per unit = $111

Fixed costs = $74,460

Variable cost per unit = $81

Let's substitute the values into the formula:

Break-even point in units = $74,460 / ($111 - $81)

Break-even point in units = $74,460 / $30

Break-even point in units = 2,482

Therefore, the break-even point in units for the company is 2,482 units. This means that the company needs to sell at least 2,482 units to cover all its costs and reach the break-even point, where total revenue equals total costs.