Break-even point if total cost is 6000 and price per unit is 60?

• A. 100
• B. 50
• C. 120
• D. 200

Answer: (A)

The idea being tested is how many units must be sold to cover all costs. Here, the total cost given represents fixed costs, and there are no variable costs specified, so each unit sold contributes the full sale price to covering those fixed costs. Break-even in units is fixed costs divided by price per unit: six thousand divided by sixty equals one hundred. So you need to sell one hundred units to break even. If you sold fifty units, revenue would be three thousand, which is not enough to cover six thousand. If you sold one hundred twenty units, revenue would be seven thousand two hundred, which would exceed six thousand and result in a profit. If you sold two hundred units, revenue would be twelve thousand, also above break-even. The key point is that break-even occurs when revenue equals total costs, given the numbers provided.