Answer:
C. 1889
Explanation:
Given fixed weekly costs of $3778 and a variable cost per handle of $1, you want to know how many handles must be produced weekly for sale at $3 each to break even.
Contribution margin
The "contribution margin" of each handle is the difference between its variable cost and its selling price:
$3 -1 = $2
Break even
The enterprise will break even when the sum of contribution margins is equal to the fixed costs. If h is the number of handles produced and sold, then to break even, we must have ...
2h = 3778
h = 1889
1889 handles must be molded weekly to break even.
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Additional comment
You get the same result if you write the profit equation and solve for the number of handles that makes profit be zero.
profit = revenue -cost
0 = (3h) -(3778 +1h)
3778 = 2h . . . . . as above
1889 = h