A firm has fixed operating costs of $25,000, a per unit sales price of $5, and a variable cost per unit of $3. What is its operating breakeven point if it targets net operating income of $10,000?
A) 12,500 units
B) 15,000 units
C) 17,500 units
D) 25,000 units

Question

Quizplus · Accepted Answer

The operating breakeven point is calculated by dividing the sum of fixed costs and target net operating income by the contribution margin per unit (sales price per unit - variable cost per unit). Here, it is ($25,000 + $10,000) / ($5 - $3) = 17,500 units.

A Firm Has Fixed Operating Costs of $25,000, a Per