Gourmet Pets Is Interested in Computing the Break-Even Point for Its

question 239

Multiple Choice

Gourmet Pets is interested in computing the break-even point for its new product Prime Cuts. The fixed costs of adding this product to the product line amounts to $20,000. Variable costs to produce one package of Prime Cuts are $2. Prime Cuts will sell for $6 per package. The break-even point would be

• A) 900 units.
• B) 2,800 units.
• C) 5,000 units.
• D) There is not enough information to find the correct answer.

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Definitions:

Merit Pay Programs

Compensation programs where employees receive bonuses or pay increases based on their performance evaluations.

Straight Commission Plans

Compensation plans where an employee's earnings are directly tied to the sales or revenue they generate, without any base salary.

Commissions

Incentive pay calculated as a percentage of sales.

Salesperson

An individual who sells goods and services to consumers or businesses, often working on commission.