Question

The sweet factory produces and sells specialty fudge. the selling price per pound is $20, variable costs are $12 per pound, and total fixed costs are $6,000. what are breakeven sales in dollars? select one:

a. $9,000
b. $3,750
c. $750
d. $15,000

Answer 1

The breakeven sales in dollars for the sweet factory is calculated using the formula for breakeven point, yielding $15,000 as the correct answer, which is option (d).

Step-by-step explanation:

To calculate the breakeven sales in dollars for the sweet factory, we use the formula for breakeven point in sales dollars: Breakeven Sales = Fixed Costs / (1 - (Variable Costs / Selling Price)).

We know that the selling price per pound is $20, the variable costs are $12 per pound, and the total fixed costs are $6,000.

Applying these numbers to our formula gives us:

Breakeven Sales = $6,000 / (1 - ($12 / $20))
Breakeven Sales = $6,000 / (1 - 0.6)
Breakeven Sales = $6,000 / 0.4
Breakeven Sales = $15,000

Therefore, the breakeven sales in dollars for the sweet factory is $15,000, which corresponds to option (d).

Answer 2

Price = $20
Variable cost = $12

Therefore the contribution margin = price - variable cost = 20 - 12 = $8.
The contribution margin is used to pay the total fixed costs. Since these costs equal $6000, the factory needs to sell the following amount of products:

`(6,000)/(8) =750`

Therefore, the total break-even revenue = price * break-even amount = 20 * 750 = $15,000

Hence, the correct answer is D. $15,000