Question

A candy store has fixed expenses (rent, utilities, etc.) that total to $40,000/year. The company also has two full time employees with salaries of $20,000/year. There is also a part time employee who earns $12,000 per year, with the potential to earn a $4,000 bonus if sales exceed $100,000 within the year. If the candy can be made for $5/box and is sold for $8/box, what is the minimum number of boxes that must be sold each year to break even?

Answer 1

Break-even point in units= 25,333.33 = 25,333

Step-by-step explanation:

Giving the following information:

Total fixed cost= 40,000 + 20,000 + 12,000 + 4,000= $76,000

Selling price per unit= $8

Uniitary variable cost= $5

To calculate the break-even point in units, we need to use the following formula:

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 76,000 / (8 - 5)

Break-even point in units= 25,333.33 = 25,333