Question

A product sells for $200 per unit, and its variable costs are 65% of sales. the fixed costs are $420,000. what is the break-even point in sales dollars? multiple choice $2,100. $6,000. $420,000. $646,154. $1,200,000.

Answer 1

Unit sale price = $200
Variable costs are 65% of sales = ($200)(.65) = $130
Fixed costs = $420,000

To solve:
Break-even point = fixed costs / (sales price per unit - variable cost per unit)
Break-even point = $420,000 / ($200-$130)
Break-even point = $420,000 / $70
Break-even point = $6,000