Assume the following facts about a single product firm: $\begin{array}{l}
\text {Selling price per unit }&=\$ 25.00 \
\text { Variable costs per unit}&=\$ 20.00 \
\text {Total annual fixed costs }&=\$ 30,000
\end{array}$ What is the firm's annual breakeven volume in sales revenues?
A) $6,000
B) $250,000
C) $150,000
D) $1,500

Question

Quizplus · Accepted Answer

The breakeven volume in sales revenues is calculated by dividing the total fixed costs by the contribution margin per unit (selling price per unit minus variable cost per unit), then multiplying by the selling price per unit. Here, it is $(\$30,000 / (\$25 - \$20)) \times \$25 = \$150,000$.

Assume the Following Facts About a Single Product Firm What Is the Firm's Annual Breakeven Volume in Sales Revenues