Question

Robinson Crusoe was trying to decide if they should continue making coin purses or outsource to a supplier. Their fixed costs to make them in house were $3,750, and the variable costs were $1.35 per unit. One of their suppliers in Mexico made a similar product for $5.75 per unit. Calculate the break-even point. Group of answer choices 594 units 852 units 652 units 2,778 units 15,972 units

Answer 1

852 units

Step-by-step explanation:

The break-even point is number of unit produced whereas the cost of in house produced equal to selling price of similar products

Selling price of similar products = fixed cost per unit + variable cost per unit

$5.75 = $3,750/ number of unit produced + $1.35

number of unit produced = $3,750/($5.75-$1.35) = 852 units