If Spruce Pine Mfg. Co. has fixed costs of $300,000 and variable costs of $30 per unit with a selling price of $50, what is the break-even point in units?

If Spruce Pine Mfg. Co. has fixed costs of $300,000 and variable costs of $30 per unit with a selling price of $50, what is the break-even point in units?

• A. 10,000 units
• B. 12,000 units
• C. 15,000 units
• D. 20,000 units

Answer: (C)

To determine the break-even point in units for Spruce Pine Mfg. Co., you first need to understand the concepts of fixed costs, variable costs, selling price, and the formula used to calculate the break-even point. The break-even point is where total revenues equal total costs, meaning there is no profit or loss. The formula for calculating the break-even point in units is: Break-even point (units) = Fixed Costs / (Selling Price per unit - Variable Cost per unit) In this scenario, the fixed costs are $300,000. The variable costs are $30 per unit, and the selling price is $50 per unit. First, calculate the contribution margin per unit, which is the selling price minus the variable cost: Contribution margin = Selling Price - Variable Cost Contribution margin = $50 - $30 = $20 per unit Next, substitute the values into the break-even formula: Break-even point = $300,000 / $20 per unit = 15,000 units This calculation shows that the break-even point for Spruce Pine Mfg. Co. is indeed 15,000 units. Therefore, the correct interpretation of the data and application of the break-even formula confirms that achieving sales of

To determine the break-even point in units for Spruce Pine Mfg. Co., you first need to understand the concepts of fixed costs, variable costs, selling price, and the formula used to calculate the break-even point.

The break-even point is where total revenues equal total costs, meaning there is no profit or loss. The formula for calculating the break-even point in units is:

Break-even point (units) = Fixed Costs / (Selling Price per unit - Variable Cost per unit)

In this scenario, the fixed costs are $300,000. The variable costs are $30 per unit, and the selling price is $50 per unit.

First, calculate the contribution margin per unit, which is the selling price minus the variable cost:

Contribution margin = Selling Price - Variable Cost

Contribution margin = $50 - $30 = $20 per unit

Next, substitute the values into the break-even formula:

Break-even point = $300,000 / $20 per unit = 15,000 units

This calculation shows that the break-even point for Spruce Pine Mfg. Co. is indeed 15,000 units. Therefore, the correct interpretation of the data and application of the break-even formula confirms that achieving sales of