If fixed costs are £50,000; selling price £60; variable cost £30, how many units are required to breakeven?

• A. 1,500
• B. 2,000
• C. 1,667
• D. 3,000

Answer: (C)

Break-even happens when total revenue just covers total costs. Each unit adds to fixed costs a contribution equal to selling price minus variable cost: 60 minus 30 equals 30. To cover fixed costs of 50,000, you divide by this per-unit contribution: 50,000 / 30 = 1,666.666… Since you can’t sell a fraction of a unit, you must sell the next whole unit, 1,667, to reach or exceed break-even. At 1,667 units, total contribution is 1,667 × 30 = 50,010, which covers fixed costs and leaves a small profit. So you’d need 1,667 units.