Product X sells for $20 per unit and has variable costs of $10 per unit.If the fixed costs amount to $45,000,the breakeven point will be:
A)4,500 units.
B)1,500 units.
C)2,250 units.
D)6,225 units.

Question

Quizplus · Accepted Answer

The breakeven point is the point at which total revenue equals total costs. In this case, the total revenue is equal to the selling price per unit multiplied by the number of units sold. The total costs are equal to the variable costs per unit multiplied by the number of units sold plus the fixed costs. So, the breakeven point is the point at which the selling price per unit multiplied by the number of units sold equals the variable costs per unit multiplied by the number of units sold plus the fixed costs. In this case, the selling price per unit is $20, the variable costs per unit are $10, and the fixed costs are $45,000. So, the breakeven point is the point at which 20x = 10x + 45,000. Solving for x, we get x = 4,500. So, the breakeven point is 4,500 units.

Product X Sells for $20 Per Unit and Has Variable