What volume is required to break even if a product has fixed costs of $25,000,variable costs of $25 per unit,and the sales price is $40 per unit?
A)15,625 units
B)1,667 units
C)1,000 units
D)625 units
E)385 units

Question

Quizplus · Accepted Answer

The break-even point can be calculated using the formula:

Break-even point = Fixed costs ÷ (Sales price per unit - Variable costs per unit)

Substituting the values given:

Break-even point = $25,000 ÷ ($40 - $25) = $25,000 ÷ $15 = 1666.67 ≈ 1667 units

Therefore, the best choice is B, which is 1,667 units. This is the minimum number of units that need to be sold to cover the fixed and variable costs and break even.

What Volume Is Required to Break Even If a Product