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20 November, 00:11

Narchie sells a single product for $50. Variable costs are 60% of the selling price, and the company has fixed costs that amount to $400,000. Current sales total 16,000 units. Narchie: will break-even by selling 13,333 units. will break-even by selling 8,000 units. will break-even by selling 20,000 units. cannot break-even because it loses money on every unit sold. will break-even by selling 1,000,000 units.

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  1. 20 November, 00:34
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    The break even units is 20,000 units

    Explanation:

    Firstly, the break even units needds to be calculated and is as follows:

    Selling price per unit = $50.00

    variable costs = $30.00

    Contribution Margin per unit = $20.00

    BEP units = Fixed cost by contribution margin per unit

    Fixed overhead = $400000

    Contribution margin = $20

    BEP = 20000 units

    where : BEP = Break even units

    Therefore, the break even units will be at 20000 units.

    As per the given options in the question, the option C is the correct option.
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