Tim Marlow, the Owner of the Clock Works, Wanted to Know

Multiple Choice

Tim Marlow, the owner of The Clock Works, wanted to know how many clocks he must sell in order to cover his fixed cost at a given price. Marlow knew that he had total fixed costs of $20,000 for equipment, taxes, and a bank loan. He also had a unit variable cost of $20 per clock for labor and materials. If the price Marlow charges for each of his clocks is $40, what is his break-even point quantity?

A) 100 clocks
B) 334 clocks
C) 500 clocks
D) 1,000 clocks
E) 10,000 clocks