The owner of a greenhouse and nursery is considering whether to spend $6,000 to acquire the licensing rights to grow a new variety of rosebush, which she could then sell for $6 each. Per-unit variable cost would be $3. How many rosebushes would she have to produce and sell in order to break even?
A)1,600
B)2,400
C)2,000
D)1,000
E)1,500

Question

Quizplus · Accepted Answer

To break even, the total revenue must equal the total costs. The fixed cost is $6,000 for the licensing rights. Each rosebush sells for $6 and costs $3 to produce, leaving a profit of $3 per rosebush. To cover the $6,000 fixed cost with a $3 profit per unit, divide $6,000 by $3, which equals 2,000 rosebushes.

The Owner of a Greenhouse and Nursery Is Considering Whether