Question

Werth Company produces tie racks. Its estimated fixed costs for the year are $288,000, and the estimated variable costs per unit are $14. Werth expects to produce and sell 60,000 racks at a price of $20 per unit. How many units will be sold at breakeven?

Answer 1

The correct answer is 48,000.

Step-by-step explanation:

According to the scenario, the given data are as follows:

Estimated fixed costs = $288,000

Estimated variable costs / unit = $14

Estimated sells Price = $20

So, we can calculate the number of units sold at breakeven by using the following formula:

Breakeven point = Estimated fixed costs / Estimated sells Price - Estimated variable costs

So, by putting the value, we get

= $288,000 / $20 - $14

= $288,000 / $6

= 48,000

Hence, the units that will be sold at breakeven is 48,000.