ITPEC FE Morning April 2023 Question 79
ITPEC FE Morning April 2023 — Question 79 of 80
Break-Even Analysis — find the sales revenue where total cost equals total revenue.
Given: Fixed cost = $128,000, variable cost = $48/unit, selling price = $80/unit.
Step 1: Find break-even quantity:BEP (units) = Fixed Cost / (Price - Variable Cost)BEP = 128,000 / (80 - 48) = 128,000 / 32 = 4,000 units
Step 2: Convert to sales dollars:BEP (dollars) = 4,000 × 80 = $320,000
Why not others:
- (a) 240,000 — only 3,000 units, costs still exceed revenue
- (c) 480,000 — 6,000 units, already profitable
- (d) 560,000 — 7,000 units, well past break-even
Key rule: BEP (units) = Fixed Cost / (Price - Variable Cost per unit). Multiply by price to get BEP in dollars.
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