What Is the Break-Even Point in Units, Assuming a Product's

question 33

Multiple Choice

What is the break-even point in units, assuming a product's selling price is $100, fixed costs are $8,000, unit variable costs are $20, and operating income is $32,000?

• A)100 units
• B)300 units
• C)400 units
• D)500 units
• E)600 units

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Definitions:

Variable Costs

Expenses that change in proportion to the activity of a business, such as costs for raw materials or production inputs.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance premiums.

Marginal Revenue

The additional income generated from selling one more unit of a good or service.

Marginal Cost

The uptick in the sum total of costs due to the production of an additional unit of a good or service.