Quentin produces highly specialized widgets at his factory. He sells them for $150 each and has a gross profit of $100 on each one. His monthly costs are: $5,000 for rent, $1,000 for utilities, $13,000 for salaries and benefits, $1,000 for insurance, $3,000 for interest on his debt. How many widgets does he have to sell to cover his fixed costs?
A) 230
B) 2,300
C) 23,000
D) 3,500

Question

Quizplus · Accepted Answer

Quentin's total monthly fixed costs are $5,000 (rent) + $1,000 (utilities) + $13,000 (salaries and benefits) + $1,000 (insurance) + $3,000 (interest on debt) = $23,000. Since he makes a gross profit of $100 on each widget, he needs to sell $23,000 / $100 = 230 widgets to cover his fixed costs.

Quentin Produces Highly Specialized Widgets at His Factory