Clay Industries, a large industrial firm, is evaluating the sales of its existing line of coiled machine tubing. In their analysis, the operating managers of Clay
Industries have identified the following information related to the coiled machine tubing division and its product:
Average variable cost of $100.50
Average sales price of $167.75 -
Breakeven quantity of 15,985 units
Which of the following best describes the total fixed cost for this product?
Click on the arrows to vote for the correct answer
A. B. C. D. E. F.F
To calculate the breakeven quantity for a product, use the following equation: {Fixed operating costs/[avg. sales price per unit - variable cost per unit]}. To determine the total fixed production cost of this product, we must rearrange the standard equation using algebra, in a manner such that the resulting equation resembles the following: [$167.75 - $100.50]
* 15,985 units = X. Solving for X, which represents the total fixed production costs, yields an answer of $1,075,000.