Question 3:

You own a small manufacturing business that produces widgets. You have spent $400,000 acquiring the fixed assets you need to produce widgets. Each widget costs you $3 to make and they sell for $25 each, so your variable cost is 12% of the overall revenue.

At your current level of operating leverage, how many widgets must you sell to break even?

• a.)18,182
• b.)22,451
• c.)16,000
• d.)48,000