Felicia Wants to Know How Many Units She Must Sell

question 154

Multiple Choice

Felicia wants to know how many units she must sell to cover all of her costs. She indicates to you that her selling price is $20 per unit, her fixed costs are $6,000, and the variable costs per unit are $15. What is her break-even point?

• A) 300 units
• B) 400 units
• C) 1,200 units
• D) 1,100 units

---

Definitions:

Cost Curve

A graph showing the relationship between the cost of producing goods and the quantity produced.

Average Fixed Cost

Production's unchanging charges, unaffected by output levels, divided by the total output quantity.

Average Variable Cost

The cost a company incurs to produce one additional unit of a product, calculated by dividing the total variable costs by the number of units produced.

Average Variable Cost

The cost per unit of variable inputs (like labor or materials) for producing a good, which changes with the level of output.