Question

North Safety Products manufactures butyl gloves that offer permeation resistance to gas or water vapors for workers who use dangerous chemicals like ketones. The company has fixed costs of $10 million for its butyl glove production and unit variable costs of $3 per pair. If the company charges $8 per pair, how many pairs of gloves must it sell to break even?a. 200,000 pairs

b. 500,000 pairs
c. 666,667 pairs
d. 1,000,000 pairs
e. 2,000,000 pairs

Answer 1

Break-even point in units= 2,000,000 units

Step-by-step explanation:

Giving the following information:

The company has fixed costs of $10 million for its butyl glove production and unit variable costs of $3 per pair. The company charges $8 per pair.

To determine 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= 10,000,000 / (8 - 3)

Break-even point in units= 2,000,000 units