A new product that will sell for $75.00 has variable costs of $38.00 per unit.Fixed costs of $75,000 must be incurred every year to manufacture this product.What is the annual volume to break even?
A) Fewer than 1500 units.
B) 1500 to 1749 units
C) 1750 to 1999 units
D) 2000 units or more

Question

Quizplus · Accepted Answer

The break-even point is calculated by dividing the total fixed costs by the contribution margin per unit (selling price - variable cost). Here, it is $75,000 / ($75 - $38) = 2027 units, which falls in the "2000 units or more" category.

A New Product That Will Sell for $75