Credit Sprint / Practice problems / Break-even quantity

Break-even quantity practice problems

Marketing Unit 8. Try each one, then open the worked solution. The Credit Sprint app generates unlimited new versions with fresh numbers.

Problem 1.

A firm has fixed costs of $4,000 per year. Its product sells for $10 and the variable cost is $0 per unit. How many units must it sell to break even? (Round up to a whole unit.)

Show solution

Contribution per unit = 10 − 0 = 10. Break-even = 4000 ÷ 10 = 400, so 400 units.

Problem 2.

A firm has fixed costs of $31,000 per year. Its product sells for $40 and the variable cost is $36 per unit. How many units must it sell to break even? (Round up to a whole unit.)

Show solution

Contribution per unit = 40 − 36 = 4. Break-even = 31000 ÷ 4 = 7750, so 7750 units.

Problem 3.

A firm has fixed costs of $31,000 per year. Its product sells for $20 and the variable cost is $16 per unit. How many units must it sell to break even? (Round up to a whole unit.)

Show solution

Contribution per unit = 20 − 16 = 4. Break-even = 31000 ÷ 4 = 7750, so 7750 units.

Problem 4.

A firm has fixed costs of $2,000 per year. Its product sells for $55 and the variable cost is $43 per unit. How many units must it sell to break even? (Round up to a whole unit.)

Show solution

Contribution per unit = 55 − 43 = 12. Break-even = 2000 ÷ 12 = 166.67, so 167 units.

Problem 5.

A firm has fixed costs of $11,000 per year. Its product sells for $10 and the variable cost is $6 per unit. How many units must it sell to break even? (Round up to a whole unit.)

Show solution

Contribution per unit = 10 − 6 = 4. Break-even = 11000 ÷ 4 = 2750, so 2750 units.

Problem 6.

A firm has fixed costs of $23,000 per year. Its product sells for $50 and the variable cost is $46 per unit. How many units must it sell to break even? (Round up to a whole unit.)

Show solution

Contribution per unit = 50 − 46 = 4. Break-even = 23000 ÷ 4 = 5750, so 5750 units.