If the fixed costs of manufacturing a new cell phone are $10,000, the sales price is $60, and variable cost per unit is $20, the break-even point is

a. 100 units.
b. 4,000 units.
c. 20 units.
d. 1,000 units.
e. 250 units.

The correct answer is Choice E.

Explanation: The formula to calculate the break even costs is:

Total fixed costs / (selling price - variable cost/unit)

Using the information for the cell phone and putting the correct numbers into the formula will give us:

10,000/(60 - 20)

10,000/40

250 units = Break-even point

The break-even point is E. 250 units.

Explanation:

Fixed costs = $10,000 (these costs do not change even if the quantity of goods or services produced does)

Variable costs = $20 (these costs do change if there is a change in quantity of goods or services produced)

Sale price = $60 (selling price of the good or service)

The break-even point is the point at which revenue covers the fixed and variable costs of a company.

To find the break-even point:

Break-even in units = Fixed costs / (sales price per unit - variable costs)

Break-even in units = $10,000 / ($60 - $20)

Break-even in units = $10,000 / $40

Break-even in units = 250

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