A firm has fixed operating costs of $25,000, a per unit sales price of $5, and...

Question

Question

A firm has fixed operating costs of $25,000, a per unit sales price of $5, and a variable cost per unit of $3. What is its op

Answer 1

Answer #1

Ans:- Break-even point if the firm targets net operating income of $10,000 will be given by

[ Fixed operating cost + Net operating Income ] / ( Sale Price per unit - Variable Cost per unit)

= [ $25,000 + $10,000 ] / ( $5 - $3 ) = $35,000 / $2 = 17,500 units. option (b) is the right answer.

Therefore, the firm's Break-even point if the firm targets a net operating income of $10,000 will be $17,500.

Answer 2

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