Question

a firm has fixed costs of $30,000 per year, depreciation of $10,000 per year, a price per unit of $50, and an accounting break-even point of 2,000 units. what are the firm's total variable costs at the accounting break-even point

Answer 1

At the accounting break-even point, the firm's total variable costs are $60,000, calculated by subtracting total fixed costs from total revenue.

Step-by-step explanation:

The firm has fixed costs of $30,000 per year and depreciation of $10,000 per year. Given the price per unit of $50 and an accounting break-even point of 2,000 units, we can determine the total variable costs at the accounting break-even point. The break-even point is where total costs equal total revenue, so at this point, the revenue is $50 x 2,000 units = $100,000. The total fixed costs, including depreciation, are $30,000 + $10,000 = $40,000. Therefore, the total variable costs at the break-even point would be the total revenue minus the total fixed costs, which is $100,000 - $40,000 = $60,000.