What is the break-even point in units if fixed costs are $10,000, selling price

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Question: What is the break-even point in units if fixed costs are $10,000, selling price per unit is $50, and variable cost per unit is $30?

Options:

Correct Answer: 1,000 units

Solution:

Break-even point (units) = Fixed Costs / (Selling Price - Variable Cost) = $10,000 / ($50 - $30) = 500 units.

What is the break-even point in units if fixed costs are $10,000, selling price per unit is $50, and variable cost per unit is $30?

What is the break-even point in units if fixed costs are $10,000, selling price per unit is $50, and variable cost per unit is $30?

Step 1: Identify the fixed costs. In this case, the fixed costs are $10,000.
Step 2: Identify the selling price per unit. Here, the selling price is $50.
Step 3: Identify the variable cost per unit. The variable cost is $30.
Step 4: Calculate the contribution margin per unit by subtracting the variable cost from the selling price. This is $50 - $30 = $20.
Step 5: Use the break-even point formula: Break-even point (units) = Fixed Costs / Contribution Margin per unit.
Step 6: Substitute the values into the formula: Break-even point (units) = $10,000 / $20.
Step 7: Perform the division: $10,000 divided by $20 equals 500 units.

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