Question

Neil, an artist, plans to paint and sell some miniature paintings. He just bought some brushes for $100, and paint and canvas for each painting costs $9; he will sell each painting for $10. Once Neil sells a certain number of his paintings, he will be breaking even. How many paintings will that be?

Answer 1

Answer: 100 paintings

Explanation:

To calculate the breakeven point, use the following formula:

= Fixed cost / Contribution margin

The Fixed cost is the one that does not change which is the $100 spent on brushes.

Contribution margin = Sales price - variable cost(cost that he incurs per painting)

= 10 - 9

= $1

Breakeven point = 100/1

= 100 paintings