Question

Clothes company produce suites the variable cost to make each one is $20 each and sells them for $30 each. The cost to rent for the factory is $400. How many suits the company should sell to break-even point?

Answer 1

Break-even point in units= 40

Explanation:

Giving the following information:

Unitary variable cost= $20

Selling price per unit= $30

Fxed costs= $400

To calculate the break-even point in units, we need to use the following formula:

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 400 / (30 - 20)

Break-even point in units= 40