If a firm has fixed costs of $60,000, a sales price of $7.00 per unit, and a break-even point of 25,000 units, the variable cost per unit is ________.
A) $5.00
B) $4.60
C) $5.40
D) $4.00

Question

Quizplus · Accepted Answer

The break-even point formula is:
Break-even point = Fixed costs ÷ (Sales price per unit − Variable cost per unit)

Substituting the given values,
25000 = 60000 ÷ (7 − Variable cost per unit)

Solving for Variable cost per unit:
Variable cost per unit = 4.60 (rounded to two decimal places)

If a Firm Has Fixed Costs of $60,000, a Sales