Question

A bicycle store costs ​$4500 per month to operate. The store pays an average of ​$65 per bike. The average selling price of each bicycle is ​$155. How many bicycles must the store sell each month to break​ even?

Answer 1

Answer: 50 bicycles

Explanation:

The breakeven quantity is the amount that must be sold to bring the profit to zero.

You can use the following formula to calculate it:

= Fixed cost / Contribution margin

Fixed cost= $4,500 per month to operate

Contribution margin = Selling price - Variable cost = 155 - 65 = $90

Breakeven = 4,500 / 90

= 50 bicycles