if fixed costs are $250,000, the unit selling price is $125, and the unit variable costs are $73, the break-even sales in units (rounded to the nearest whole unit) is

a. 3,425 units
b. 2,000 units
c. 4,808 units
d. 2,381 units

Question

if fixed costs are $250,000, the unit selling price is $125, and the unit variable costs are $73, the break-even sales in units (rounded to the nearest whole unit) is

a. 3,425 units
b. 2,000 units
c. 4,808 units
d. 2,381 units

Accepted Answer

{ "quality": "clear", "question_count": 1, "skills_matched": [ "step_cot", "multiple_choice_formatter", "explain_then_answer", "tutor", "mastery_adaptive_brevity" ], "needs_drawing": false, "concepts_used": [ "Fixed Cost", "Variable Cost", "Unit Contribution Margin", "Break-Even Analysis" ], "new_concepts": [], "current_concepts": [ "Fixed Cost", "Variable Cost", "Unit Contribution Margin", "Break-Even Analysis" ] } ## Identify the given values Using the *Fixed Cost* and *Variable Cost* knowledge points $$ \begin{aligned} &\text{Fixed Costs (FC)} = \$250,000 \ &\text{Unit Selling Price (P)} = \$125 \ &\text{Unit Variable Cost (V)} = \$73 \end{aligned} $$ ## Calculate unit contribution margin Using the *Unit Contribution Margin* knowledge point $$ \begin{aligned} \text{Unit Contribution Margin (UCM)} &= P - V \ &= \$125 - \$73 \ &= \$52 \end{aligned} $$ ## Calculate break-even sales in units Using the *Break-Even Analysis* knowledge point $$ \begin{aligned} \text{Break-Even Sales (Units)} &= \frac{\text{FC}}{\text{UCM}} \ &= \frac{\$250,000}{\$52} \ &\approx 4,807.69 \text{ units} \ &\approx 4,808 \text{ units} \end{aligned} $$

a. 3,425 units

b. 2,000 units

c. 4,808 units

d. 2,381 units

{ "subject": "Business", "question_type": "Multiple Choice", "knowledge_point": [ "Business", "Accounting", "Cost-Volume-Profit Analysis" ] }

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QUESTION IMAGE

Question

Explanation:

Identify the given values

Calculate unit contribution margin

Calculate break-even sales in units

Answer: