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An umbrella manufacturing company's fixed costs are $275,000. The variable cost per unit is $5 and each umbrella is sold at $10. How many units should the firm sell in order to break even?

Respuesta :

TomShelby

Answer:

BEP in units = 55,000 umbrellas

Explanation:

[tex]\frac{Fixed\:Cost}{Contribution \:Margin} = Break\: Even\: Point_{units}[/tex]

[tex]Sales \: Revenue - Variable \: Cost = Contribution \: Margin[/tex]

10 - 5 = 5 CM per unit

Each units generates 5 dolalrs of contribution to pay the fixed cost and generate earnigns after that.

275,000/5 = 55,000

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