Question

Scenario 12.1. Chantel, a resident of Denver, Colorado, decided to open up her own fine jewelry store. To do so, she used her life savings and a loan from the bank. Chantel was able to open up a store with sufficient inventory. She markets the jewelry as the "finest jewelry in the West." The most popular item Chantel sells is a rose gold bracelet that sells for $550. During one month, Chantel's fixed costs are $6,000. Her variable costs average about $400. Refer to Scenario 12.1. How many rose gold bracelets would Chantel have to sell to break even

Answer 1

One of the ways you can calculate the break even point is by using the formula B.E = Fixed costs ÷ (Revenue per Unit – Variable Cost per Unit). Applying the case, we would have. 6000 ÷ (550 - 400) = 6000 ÷ 150 = 40. That means that in a month, to get to the break even point she needs to sell at least 40 of the rose gold bracelet.