A business sells a product for $20. The variable cost per unit is $12 and fixed costs total $32,000. What is the break-even output?

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Question

A business sells a product for $20. The variable cost per unit is $12 and fixed costs total $32,000. What is the break-even output?

Accepted Answer

4,000 units — Break-even output = Fixed Costs ÷ Contribution per unit = $32,000 ÷ ($20 − $12) = $32,000 ÷ $8 = 4,000 units. Option A incorrectly divides fixed costs by selling price alone. Option C divides fixed costs by variable cost per unit. Option D divides fixed costs by the selling price minus a wrong value.

Answer

2,667 units

Answer

4,000 units

Answer

1,600 units

Answer

2,000 units

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