Question

Touché Toiletries, Inc., has developed an addition to its Lizardman Cologne line tentatively branded Ode d’Toade Cologne. Unit variable costs are 45 cents for a three-ounce bottle, and heavy advertising expenditures in the first year would result in total fixed costs of $900,000. Ode d’Toade Cologne is priced at $7.50 for a three-ounce bottle. How many bottles of Ode d’Toade must be sold to break even

Answer 1

Number of bottle = 127,660

Step-by-step explanation:

When facing with this kind of break-even exercise, keep in mind that break-even point is achieved when sales is just enough to cover all related operating cost. Let formulate the problem as below:

Number of bottle x Selling price per bottle - Number of bottle x Varibale cost per bottle - Total fixed cost = 0

Putting all the number together, we have

Number of bottle x 7.5 - Number of bottle x 0.45 - 900,000 = 0.

Solve the equation, we have Number of bottle = 127,660