Question

A company's product sells at $12 per unit and has a $5 per unit variable cost. The company's total fixed costs are $98,000. The break-even point in units is: Multiple Choice 5,158. 7,000. 8,167. 14,000. 19,600.

Answer 1

Answer:

14,000 units

Explanation:

By the use of the cost volume analysis concept, the break-even point is obtained by dividing fixed costs by contribution margin per unit.

in this case,

fixed costs are $98,000

contribution margin per unit??

CM per unit = selling cost per unit - variable cost per unit

=$12- $5

contribution margin = $7 per unit

break-even point= $98,000/ $7

break -even = 14,000 units