Question

Planet company sells a product for $16 per unit, variable cost is $12 per unit, and the total fixed cost is $6,000. What is the break-even point in units?

Answer 1

The following formula is used to calculate break even point:

Break even point = Fixed cost/(Price per unit - Variable cost per unit)

Substituting for the values given;

Break even point = 6,000/(16-12) = 1,500 units