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.

Solutions

Expert Solution

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

jeff jeffy answered 2 years ago

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