Fabricators, Inc. wants to increase capacity by adding a new machine. The fixed costs for machine A are $90,000, and its variable cost is $15 per unit. The revenue is $23 per unit. What is the break-even point for machine A?
A) $90,000
B) 11,250 units
C) $11,250
D) 15,000 units
E) 3,193 units

Question

Quizplus · Accepted Answer

The break-even point in units can be calculated using the formula: Break-even point in units = Fixed Costs / (Revenue per unit - Variable Cost per unit). For machine A, this is $90,000 / ($23 - $15) = $90,000 / $8 = 11,250 units.