Question

If unit sales prices are $7 and variable costs are $5 per unit, how many units would have to be sold to break-even if fixed costs equal $8,000?

Answer 1

Answer: 4,000 units

Explanation:

The breakeven point of sales can be calculated by the formula:

= Fixed costs / Contribution margin

Contribution margin = Sales price - Variable cost

= 7 - 5

= $2

Breakeven point in sales:

= 8,000 / 2

= 4,000 units