Question

Harmony Company sells hand-knit scarves. Each scarf sells for $40. The company pays $60 to rent vending space for one day. The variable costs are $15 per scarf. How many scarves should the company sell each day in order to break even? (Round your answer up to the nearest whole scarf.)

Answer 1

Break-even point= 2.4 units= 3 units

Step-by-step explanation:

Giving the following information:

Each scarf sells for $40. The company pays $60 to rent vending space for one day. The variable costs are $15 per scarf.

We need to use the following formula:

Break-even point= fixed costs/ contribution margin

Break-even point= 60/ (40 - 15)= 2.4 units