In: Finance
Tim Taylor has written a self improvement book that has the following cost characteristics:
Selling Price | $16.00 per book |
Variable cost per unit: | |
Production | $4.00 |
Selling & administrative | 2.00 |
Fixed costs: | |
Production | $93,000 per year |
Selling & administrative | 25,800 per year |
How many units must be sold to break-even?
Round to two decimal places.
Total variable costs per unit=(4+2)=$6 per unit
Total fixed costs=(93000+25800)=$118800
Contribution margin=Sales-Variable cost
=(16-6)=$10 per unit
Breakeven=Fixed expenses/Contribution margin
=118800/10
=11880 units