19.7k views
0 votes
Suppose you are the owner of a picture frame store and your current fixed costs total $50,000 (real estate taxes, interest on a bank loan, etc.).

In addition, your current unit variable cost for a picture is $50( which includes labor, glass, frame, and matting).

Calculate the price necessary to break-even by selling a quantity of 1,000 frames.

User Ezra
by
8.4k points

1 Answer

5 votes

Answer:

$100

Step-by-step explanation:

Given that,

Total fixed cost = $50,000

Break even units = 1,000

Variable cost per unit = $50

Break even Units = Fixed Cost ÷ Contribution Per unit

Contribution Per unit = Fixed Cost ÷ Break even Units

= $50,000 ÷ 1,000

= $50

Sales - Variable Cost = Contribution per unit

Sales - $50 = $50

Sales price per unit = $50 + $50

= $100

Therefore, the price necessary to break-even by selling a quantity of 1,000 frames is $100.

User Ewulff
by
8.2k points

No related questions found

Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories