Gourmet Pets is interested in computing the break-even point for its new product Prime Cuts. The fixed costs of adding this product to the product line amounts to $20,000. Variable costs to produce one package of Prime Cuts are $2. Prime Cuts will sell for $6 per package. The break-even point would be
A) 900 units.
B) 2,800 units.
C) 5,000 units.
D) There is not enough information to find the correct answer.

Question

Quizplus · Accepted Answer

Fixed costs of $20,000/(selling price $6, variable costs $2) = 5000 units. The break-even point is that sales volume where total sales revenue equals total costs.

Gourmet Pets Is Interested in Computing the Break-Even Point for Its