AchtTre has found that its pretax operating cash flow basis break-even number of glasses sold is 550,000 pairs. If each pair is sold for $15 and the variable cost per unit is $10, then what is the amount of AchtTre's fixed costs?
A) $887,000
B) $1,558,000
C) $2,750,000
D) $1,582,000

Question

Quizplus · Accepted Answer

The formula for break-even point in units is:

Break-even point (units) = Fixed costs / (Price - Variable costs)

Using the given information, we can calculate the break-even point in units:

550,000 = Fixed costs / (15 - 10)

550,000 = Fixed costs / 5

Fixed costs = 550,000 x 5 = $2,750,000

Therefore, the amount of AchtTre's fixed costs is $2,750,000. The correct answer is C.

AchtTre Has Found That Its Pretax Operating Cash Flow Basis