Question

Green Manufacturing Company produces a product that has a variable cost of $30 per unit. Fixed costs amount to $240,000. The selling price of the product is $36. How many units of product must Green produce and sell to break even?A. 40,000 unitsB. none of the above.C. 48,000 unitsD. 46,667 units

Answer 1

Answer:

A. 40,000 units

Explanation:

To break even, the total cost must be equal to the total revenue. The cost elements are the fixed and variable cost. The variable cost is dependent on the level of activities.

Let the number of units required to breakeven be g

cost = sale

30g + 240,000 = 36g

36g - 30g = 240000

6g = 240000

g = 40000

The company must produce and sell 40000 units to break even.