Question

Assume a fixed cost for a process of $120,000. The variable cost to produce each unit of product is $35, and the selling price for the finished product is $50. Which of the following is the number of units that has to be produced and sold to break-even? (Points : 5) 5,000 units 6,000 units 8,000 units 11,000 units 12,000 units

Answer 1

Answer:

even point break = 8000

so correct option is  8000 units

Explanation:

given data

fix cost = $120000

variable cost = $35 each unit

selling price = $50

to find out

Which of the following is the number of units that has to be produced and sold to break-even

solution

we will find here even point break that is express as

even point break = $\frac{F}{S - V}$     ...................1

here F is fix cost and S is selling price and V is variable cost

so put all value in equation 1

even point break = $\frac{120000}{50 - 35}$

even point break = $\frac{120000}{15}$

even point break = 8000

so correct option is  8000 units