Larsen Films's is analyzing its cost structureIts fixed operating costs are $470,000, its variable costs of $2.80 per unit produced, and its products sell for $4.00 per unit What is the company's breakeven point, i.e., at what unit sales volume would income equal costs?
A) 391,667
B) 411,250
C) 431,813
D) 453,403
E) 476,073

Question

Quizplus · Accepted Answer

The breakeven point is calculated by dividing the fixed costs by the contribution margin per unit (selling price per unit minus variable cost per unit). Here, it is $470,000 / ($4.00 - $2.80) = 391,667 units.

Larsen Films's Is Analyzing Its Cost StructureIts Fixed Operating Costs