Break-even Analysis – Short Answer

Practice Question

Intro to Managerial Accounting
Decision-Making: Cost-Volume-Profit Analysis
Break-even Analysis
Short Answer

If a company has a total fixed cost of $60,000 and sells its product for $15, with a variable cost of $9, how many units must it sell to break even?

Answer +
Correct Answer: 10,000 units
Explanation +

Break-even point in units = Fixed Costs ÷ (Selling Price – Variable Cost) = $60,000 ÷ ($15 – $9) = 10,000 units.

This is essential for understanding sales targets (Page 47).