Question

Weber's Mail Manufacturing is a company that produces chain mail. Their most popular product is saw-cut metal links that hobbyists can use to make their own creations. The company recently spent $600 on advertising, which they hope to make back quickly. The wire used to produce one ounce of links costs $1, but the finished links sell for $4 per ounce. Eventually, the company will make back its investment and break even. What will their expenses and sales both equal?

Answer 1

Their expenses and sales will both equal at 200 ounces.

Explanation:

This can be determined using the break-even point in ounce formula as follows:

Break even point in ounce = Fixed cost / Contribution per ounce

Where;

Fixed cost = Advertising = $600

Contribution per ounce = Selling price per ounce - Cost per ounce = $4 - $1 = $3

Substituting the values into equation (1), we have:

Break even point in ounce = $600 / $3 = 200 ounces

Therefore, their expenses and sales will both equal at 200 ounces.