Question

The breakeven is 2000 units, the variable cost is $2 per unit and the fixed costs are $20,000. What is the selling price per unit Select one:

a. $2
b. $3
c. $4
d. None of the above

Answer 1

Answer:

Option (d) is correct.

Explanation:

Given that,

Break-even = 2,000 units

Variable cost = $2 per unit

Fixed costs = $20,000

Break-even(In units) = Fixed cost ÷ contribution margin

Break-even(In units) = Fixed cost ÷ (selling price per unit - variable cost per unit)

2,000 = $20,000 ÷ (selling price per unit - $2)

selling price per unit - $2 = $10

selling price per unit = $10 + $2

                                  = $12