Our company sells a product for $120 per unit. Variable costs are $90 per unit and fixed costs are $9,000. The company expects to sell 500 units this year. How many units must we sell to break even?Group of answer choices300320360400
Question
Our company sells a product for 90 per unit and fixed costs are $9,000. The company expects to sell 500 units this year. How many units must we sell to break even?Group of answer choices300320360400
Solution
To calculate the break-even point, we need to know how much profit is made per unit and how much the fixed costs are.
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First, calculate the profit per unit by subtracting the variable cost from the selling price. In this case, 90 = $30 profit per unit.
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Next, divide the fixed costs by the profit per unit to find out how many units need to be sold to cover the fixed costs. In this case, 30 = 300 units.
So, the company needs to sell 300 units to break even.
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