Solution: What is the manufacturer’s break-even sales volume in drums per year?

Steel drum manufacturer incurs a yearly fixed operating cost of $200,000. Each drum manufactured cost $160 to produce and sells $200. What is the manufacturer’s break-even sales volume in drums per year?

What is the manufacturer’s break-even sales volume in drums per year?

Problem Statement: ME Board April 1996

Steel drum manufacturer incurs a yearly fixed operating cost of $200,000. Each drum manufactured cost $160 to produce and sells $200. What is the manufacturer’s break-even sales volume in drums per year?

  • A.1250
  • B. 2500
  • C. 5000
  • D. 1000

Problem Answer:

The manufacturer’s break-even sales volume in drums per year is 5000 units.

Solution:

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