How Many Units of a Product Must Be Sold in Order

question 20

Multiple Choice

How many units of a product must be sold in order for the business to break even if total fixed costs are $500, the product is selling for $14, and the average variable cost is $8?

• A) 100 units
• B) 84 units
• C) 63 units
• D) 38 units

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Definitions:

Standard Labor Cost

The predetermined cost of labor expected under normal conditions, used for setting budgets and evaluating performance.

Payroll Taxes

Mandatory taxes withheld from an employee's earnings by an employer, which are then paid to government agencies.

Direct Labor Rate

The hourly wage paid to workers who are directly involved in the production of goods or services.

Standard Cost

A predetermined cost of manufacturing, selling, or any other operation under normal conditions.