I sell winter down coats for $1000 each. It cost $500 in variable costs for fabric,...

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I sell winter down coats for $1000 each. It cost $500 in variable costs for fabric,...

I sell winter down coats for $1000 each. It cost $500 in variable costs for fabric, feather stuffing, zippers, snaps and thread. My fixed cost for manufacturing is $200,000. What is my break-even point in units?

business economics

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Answer 2

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To calculate the break-even point in units, we need to consider the contribution margin per unit and the fixed costs.

Given: Selling price per unit (P) = $1000 Variable cost per unit (VC) = $500 Fixed costs (FC) = $200,000

Contribution margin per unit (CM) can be calculated as: CM = P - VC

CM = $1000 - $500 = $500

The break-even point in units (BE) can be calculated using the formula: BE = FC / CM

BE = $200,000 / $500

BE = 400

Therefore, the break-even point in units is 400. You would need to sell 400 winter down coats to cover your fixed costs and reach the break-even point.

answered by: Mayre Yıldırım

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