What is the break-even point in units if fixed costs are $50,000, selling price

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Question: What is the break-even point in units if fixed costs are $50,000, selling price per unit is $25, and variable cost per unit is $15?

Options:

Correct Answer: 2,500 units

Solution:

Break-even point = Fixed Costs / (Selling Price - Variable Cost) = 50000 / (25 - 15) = 2500 units.

What is the break-even point in units if fixed costs are $50,000, selling price per unit is $25, and variable cost per unit is $15?

What is the break-even point in units if fixed costs are $50,000, selling price per unit is $25, and variable cost per unit is $15?

Step 1: Identify the fixed costs. In this case, the fixed costs are $50,000.
Step 2: Identify the selling price per unit. Here, the selling price is $25.
Step 3: Identify the variable cost per unit. The variable cost is $15.
Step 4: Calculate the contribution margin per unit by subtracting the variable cost from the selling price. This is 25 - 15 = $10.
Step 5: Use the break-even formula: Break-even point = Fixed Costs / Contribution Margin. Substitute the values: 50000 / 10.
Step 6: Perform the division to find the break-even point in units: 50000 / 10 = 5000 units.

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