A firm has fixed operating costs of $525,000, of which $125,000 is depreciation expense. The firm's sales price per unit is $35 and its variable cost per unit is $22.50. The firm's cash operating breakeven point in units is
A) 23,330.
B) 32,000.
C) 42,000.
D) 52,000.

Question

Quizplus · Accepted Answer

Cash operating breakeven point = (Fixed costs - Depreciation) / (Sales price per unit - Variable cost per unit)
= ($525,000 - $125,000) / ($35 - $22.50)
= $400,000 / $12.50
= 32,000 units.

A Firm Has Fixed Operating Costs of $525,000, of Which