Question

1.) Ocean City Kite Company manufactures & sells kites for $6.50 each. The variable cost per kite is $3.50 with the current annual sales volume of 90,000 kites. This volume is currently Ocean City Kite's breaking even point. Use this information to determine the dollar amount of Ocean City Kite Company's fixed costs. (Round dollar value to the nearest whole dollar & enter as whole dollars only.)

Answer 1

$270,000

Step-by-step explanation:

Contribution per kite = $6.50 - $3.50 = $3.00

Break even point = 90,000 kites

Since;

Break even point = Fixed cost / Contribution per kite.

We have:

90,000 = Fixed cost / $3.00

Fixed cost = 90,000 * $3.00 = $270,000

Therefore, Ocean City Kite Company's fixed costs is $270,000.