Question

North Safety Products manufactures butyl gloves that offer permeation resistance to gas or water vapors for workers who use dangerous chemicals like ketones. The company has fixed costs of $10 million for its butyl glove production and unit variable costs of $5 per pair. If the company charges $15 per pair, how many pairs of gloves must it sell to break even?

Answer 1

The 1,000,000 pairs is required to sell to break even

Step-by-step explanation:

In this question we use the formula of break-even point in unit sales which is shown below:

Break-even point in units = (Fixed expenses) ÷ (Contribution margin per unit)

where,

Contribution margin per unit = Selling price per unit - Variable expense per unit

= $15 - $5

= $10

And, the other items values would remain the same

Now put these values to the above formula

So, the value would equal to

= ($10,000,000) ÷ ($10)

= 1,000,000 pairs