The Company is planning to sell Product Z for $20 a unit.Variable costs are $12 a unit and fixed costs are $100,000.What must total sales be to break even?
A)$266,667
B)$250,000
C)$200,000
D)$166,667

Question

Quizplus · Accepted Answer

The break-even point is when total revenue equals total costs.
Total costs = fixed costs + variable costs
Total costs = $100,000 + ($12 x units sold)

To find the break-even point, we set total revenue equal to total costs:
$20 x units sold = $100,000 + ($12 x units sold)

Simplifying the equation:
$8 x units sold = $100,000
Units sold = $100,000 / $8 = 12,500

Total sales = $20 x 12,500 = $250,000

Therefore, the answer is B) $250,000.

The Company Is Planning to Sell Product Z for $20