Question

Assume moe's southwest grill has a break-even point of 24,000 units. At this point, total sales are $1,800,000 and total variable costs are $1,200,000. Compute total fixed costs at the break-even point. I know the answer is 600,000 but I want to know how to solve it. Please answer

accounting only please answer​

Answer 1

Fixed Costs = $600,000

Explanation:

Total Sales = $1,800,000

Unit price (UP) = $1,800,000/24,000 units = $75

Total Variable Cost = $1,200,000

Variable Cost per unit (VC)= $1,200,000/24,000 units = $50

Break-even Point ( in units) = 24,000

Break-even point (Q) = Fixed Costs/ [UP - VC]

24,000 = FC / [$75 - $50]

24,000 = FC / [$25]

Multiply both sides by $25 to isolate FC:

24,000 ($25) = [FC / $25] $25

$600,000 = Fixed Cost