17. Using the following information, calculate the Break-Even in terms of dollars and number of units....

17. Using the following information, calculate the Break-Even in terms of dollars and number of units. (15 points)

BELT MANUFACTURER
Cost of leather per belt- $20 Cost of one belt buckle - $25
Cost to drill holes and attach buckle per belt - $5 Management payroll per month - $10,000 Operating expense per month - $20,000
Factory rent per month - $20,000
Price charged to retail store for 5 belts - $500

Cost per belt= $20, buckle /belt=$25, drill holes&buckle/belt=$5
Fixed Expense= $10,000+$20,000+$20,000= $50,000
Avg Variable Exp Per Sale= $20+ $25+$5+$100= $150
CM= Avg $ Per Sale - Avg Variable Exp Per Sale

Solutions

Expert Solution

Answer : Calculation of Breakeven Point (in units)

Breakeven Point = Fixed Cost / (Selling Price - Variable Cost)

Selling Price per belt = 500 / 5 = 100

Variable Cost per Belt = 20 + 25 + 5 = 50

Fixed Cost = 10000 + 20000 + 20000 = 50000

Breakeven Point = Fixed Cost / (Selling Price - Variable Cost)

= 50000 / (100 - 50)

= 1000 belts

Breakeven Point (in dollars ) = Breakven Point in units * Price charged

= 1000 belts * 100

= 100,000

jeff jeffy answered 2 years ago

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