Question

a store has quarterly fixed costs of $50,000 and the unit cost of their product is $10. How many units must they sell per quarter at $20 per unit to break even?

Answer 1

5,000

Step-by-step explanation:

Data provided in the question:

Quarterly fixed costs of the store = $50,000

Unit cost of the product = $10

Selling cost of per unit = $20

Now,

Contribution margin = Selling cost of per unit - Unit cost of the product

= $20 - $10

= $10

also, we know that

Break even units = [Fixed cost] ÷ [Contribution margin]

= $50,000 ÷ $10

= 5,000