Question

A product is currently made in a process-focused shop where fixed costs are $10,000 per year, and variable cost is $50 per unit. The firm sells the product for $250 per unit. What is the break-even point for this operation?
20 units
30 units
60 units
50 units

Answer 1

Answer:

Break even point will be 50 units

So option (D) will be correct answer

Explanation:

We have given fixed cost = $10000 per year

Variable cost is $50 per unit

Selling price = $250 per unit

We have to find the break even point for the operation

We know that break even point is equal to

Break even point $=\frac{fixed\ cost}{selling\ price-variable \ cost}=\frac{10000}{250-50}=\frac{10000}{200}=50unit$

So break even point will be equal to 50 units

So option (D) will be correct answer