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’s total fixed costs are $120,000 and variable costs per unit are $15 with a selling price of $30 per unit, how many units must be sold to break even?

Answer +
Correct Answer: 8,000 units
Explanation +

Break-even Point = Fixed Costs ÷ (Selling Price – Variable Cost) = $120,000 ÷ ($30 – $15) = 8,000 units.

This is crucial for financial planning (Page 51).