Last Updated on May 11, 2023
Let’s let n = the number of units sold in order to break even. The variable cost per unit is 0.4 x 2 = 0.8; thus, the variable cost for n units is 0.8n. We know that the fixed cost is $5040 and the revenue is 2n. We can create the following equation, equating total cost to total revenue:
0.8n + 5,040 = 2n
5,040 = 1.2n
4,200 = n
Answer: A
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