Question

Dream Threads Company sells handminussewn shirts for $ 40 per shirt. It incurs monthly fixed costs of $ 5 comma 000. The contribution margin ratio is calculated to be 30​%. What is the breakeven point in​ units? (Round your answer up to the nearest whole​ unit.)

Answer 1

417 units

Step-by-step explanation:

Break even Sales in $ = Fixed Costs ÷ contribution margin ratio

= $5,000 ÷ 30%

= $16,667

Break even sales in units = Break even Sales in $ ÷ selling price of each hand-sewn shirt

= $16,667 ÷ $40

= 416.675

= 417 units of hand-sewn shirt