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The current sales price of a product is $25 per unit and the variable cost is $17 per unit. Fixed costs for manufacturing the product are $40,000. The break-even point is __________ units.


A) 8,000


B) 5,000


C) 2,000


D) 1,000

Respuesta :

Answer:

Option (B) is correct.

Explanation:

Given that,

Fixed costs for manufacturing the product = $40,000

Current sales price of a product = $25 per unit

Variable cost = $17 per unit

Break even points in units:

= Fixed cost ÷ (selling price per unit - Variable cost per unit)

= $40,000 ÷ ($25 per unit - $17 per unit)

= $40,000 ÷ $8 per unit

= 5,000 units

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