Question

They sell a thousand pair of shoes at $100 a pair every 30 days the variable costs are 40% fixed costs are $35,000 a month what is the break even point

Answer 1

To calculate the break-even point, we need to determine the number of units that need to be sold in order to cover all costs.

The formula to calculate the break-even point is:

Break-even point (in units) = Fixed costs / (Selling price per unit - Variable cost per unit)

In this case, the fixed costs are given as $35,000 per month. The selling price per unit is $100, and the variable cost per unit is 40% of the selling price, which is $40.

Let's calculate the break-even point:

Break-even point (in units) = $35,000 / ($100 - $40)

Break-even point (in units) = $35,000 / $60

Break-even point (in units) = 583.33

Therefore, the break-even point is approximately 583 units. This means that in order to cover all costs and reach the break-even point, they need to sell at least 583 pairs of shoes.