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5 February, 12:20

The break-even quanity for a certain kitchen appliance is 6000 units. The selling price is $10 per unit, and the variable cost is $4 per unit. What must be the fixed cost to break even at 6000 units?

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  1. 5 February, 12:23
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    The correct answer is $36,000.

    Explanation:

    According to the scenario, the given data are as follows:

    Break even quantity = 6000 units

    Selling price = $10 / unit

    So, Sales cost = 6,000 * $10 = $60,000

    Variable cost = $4 / unit

    So, total variable cost = 6,000 * $4 = $24,000

    So, we can calculate the fixed cost by using following method:

    Fixed cost = Sales cost - Variable cost

    By putting the value,

    Fixed cost = $60,000 - $24,000

    = $36,000.

    Hence, the fixed cost is $36,000.
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