Question

The variable cost of a new computer keyboard is $25 per unit, and the fixed costs to produce the keyboard are $20,000 per year. If the selling price of the keyboard is $45, how many units must the company sell to break?

Answer 1

Break-even point in units= 1,000 units

Step-by-step explanation:

Giving the following information:

The variable cost of a new computer keyboard is $25 per unit, and the fixed costs to produce the keyboard are $20,000 per year. If the selling price of the keyboard is $45.

To calculate the break-even point in units, we need to use the following formula:

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 20,000 / (45 - 25)

Break-even point in units= 1,000 units