Management Insists That a Purchase Be Made Only If the Break-Even

question 6

Multiple Choice

Management insists that a purchase be made only if the break-even point for the purchase is at least 500 units. If the fixed cost is $600 and variable cost per unit is $3, what is the selling price that should be set to exactly achieve this break-even point?

• A) $4.20
• B) $5.00
• C) $6.00
• D) Cannot be determined from the information given

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Definitions:

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