A Product Sells for $200 Per Unit, and Its Variable

question 145

Multiple Choice

A product sells for $200 per unit, and its variable costs are 65% of sales. The fixed costs are $420,000. What is the break-even point in sales dollars?

• A) $2,100.
• B) $1,200,000.
• C) $420,000.
• D) $646,154.
• E) $6,000.

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Definitions:

Direct Manufacturing Cost

The sum of all costs directly involved in the production of a product, including direct labor and materials, but excluding indirect expenses.

Produced Units

The total quantity of completed goods produced by a company over a given time frame.

Indirect Manufacturing Cost

Expenses related to production that are not directly tied to a specific product, such as maintenance and utilities.

Produced Units

The total number of units manufactured within a specific period.