Question 6 (1 point) The Environmental Filter Company is planning to sell air filter systems for $\$ 2,500$ per unit. Variable costs are $\$ 1,500$ per unit and total fixed operating costs are $\$ 1,000,000$. What is the dollar value of sales necessary to break even? $\$ 1,000,000$. $\$ 2,500,000$. $\$ 5,000,000$. $\$ 2,000,000$.
Solution
Step 1 ：Given that the selling price per unit is \$2500, the variable cost per unit is \$1500, and the total fixed costs are \$1,000,000.
Step 2 ：The formula for the break-even point in units is: Break-even point in units = Total fixed costs / (Selling price per unit - Variable cost per unit).
Step 3 ：Substituting the given values into the formula, we get: Break-even point in units = \$1,000,000 / (\$2500 - \$1500) = 1000 units.
Step 4 ：The formula for the break-even point in sales dollars is: Break-even point in sales dollars = Break-even point in units * Selling price per unit.
Step 5 ：Substituting the values we have, we get: Break-even point in sales dollars = 1000 units * \$2500 = \$2,500,000.
Step 6 ：Final Answer: The dollar value of sales necessary to break even is \$2,500,000. Therefore, the correct answer is \(\boxed{\$2,500,000}\).
