A Company Has Total Fixed Cost of $120,000

question 223

Multiple Choice

A company has total fixed cost of $120,000. Its variable cost per unit is $2.00 and its price per unit is $3.50. The break-even point in units is:

• A) 60,000.
• B) 80,000.
• C) 34,286.
• D) 21,818.
• E) Cannot be determined from the information provided.

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Definitions:

Interest Paid

The total amount paid by a borrower to lenders as a charge for borrowing money, typically expressed as an annual percentage of the loan principal.

Cash Flows

Cash flows refer to the total amount of money being transferred into and out of a business, especially as affecting liquidity.

Financing Activities

Transactions and events where cash is raised or repaid to investors and creditors, such as issuing shares or borrowing loans.

Interest Expense

The cost incurred by an entity for borrowed funds over a period of time.