Question

The rent for a booth at the local flea market is $150 per month with a $15 charge for utilities. The variable cost per picture frame sold is $5. The selling price for each frame is $20. Calculate the break-even point in units. (round to the nearest unit).

Answer 1

Break-even point in units = 11 units

Step-by-step explanation:

Given:

Rent per month = $150

Fixed charges per = $15

Variable cost = $5

Sale value = $20

Break-even point in units = ?

Computation of Contribution:

Contribution = Sale value - Variable cost

Contribution = $20 - $5

Contribution = $15

Computation of break-even point in units:

Break-even point in units = Fixed cost / Contribution

Break-even point in units = ($150 + $15) / $15

Break-even point in units = ($165) / $15

Break-even point in units = 11 units