Question

A company sells a product which has a unit sales price of $5, unit variable cost of $3 and total fixed costs of $150,000. The number of units the company must sell to break even is:___________.
A. 50,000 units.
B. 300,000 units.
C. 75,000 units.
D. 30,000 units.

Answer 1

Answer:

c

Explanation:

Breakeven quantity are the number of  units produced and sold at which net income is zero

If the sales of a company exceeds the breakeven quantity, the firms is earning a profit.

If the company's sales is less than the Breakeven quantity , the firm is making losses that would not be recouped

Breakeven quantity = fixed cost / price – variable cost per unit

150,000 / (5 -3) = 75000