If a firm has a price of $4.00,variable cost per unit of $2.50,and a break-even point of 20,000 units,fixed costs are equal to:
A) $13,333.
B) $10,000.
C) $30,000.
D) $50,000.

Question

Quizplus · Accepted Answer

The break-even point formula is:

Break-even point = Fixed costs / (Price - Variable cost per unit)

We are given the following information:

Price = $4.00
Variable cost per unit = $2.50
Break-even point = 20,000 units

Substituting these values into the formula:

20,000 = Fixed costs / (4.00 - 2.50)

20,000 = Fixed costs / 1.50

Fixed costs = 20,000 x 1.50

Fixed costs = $30,000

Therefore, the best choice is C. $30,000.

If a Firm Has a Price of $4