Question

Pierce Company's break-even point is 12,000 units. Its product sells for $25 and has a $10 variable cost per unit. What is the company's total fixed cost amount

Answer 1

$180,000

Step-by-step explanation:

First, we need to determine the contribution margin per unit.

Contribution margin per unit = Price per unit - Variable cost per unit

= $25 - $10

= $15.

Break even point = Fixed cost / Contribution margin per unit

12,000 units = Fixed cost / $15

Fixed cost = 12,000 units × $15

Fixed cost = $180,000

Therefore, the company's total fixed cost amount is $180,000