How Many Units Must BAC Company Sell to Break Even

question 142

Multiple Choice

How many units must BAC Company sell to break even if the selling price per unit is $8.50,variable costs are $4.00 per unit,and fixed costs are $9,000?

• A)1,000 units
• B)1,059 units
• C)2,000 units
• D)2,250 units

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Definitions:

Profitability Index

A financial tool used to assess the desirability of an investment by dividing the present value of future cash flows by the initial investment cost.

Economic Lives

The duration over which an asset is expected to be useful in generating revenue or other economic benefits.

Equivalent Annual Cost

The cost per year of owning and operating an asset over its entire lifespan, taking into account both the initial purchase price and the ongoing operating costs.

NPV

A calculation technique used to estimate the value of an investment by assessing the present value of all cash flows associated with it, both incoming and outgoing.