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Umnica [9.8K]
3 years ago
15

Suppose you are the owner of a picture frame store and your current fixed costs total $50,000 (real estate taxes, interest on a

bank loan, etc.). In addition, your current unit variable cost for a picture is $50 (which includes labor, glass, frame and matting). Calculate the price necessary to break-even by selling a quantity of 1,000 frames.
Business
1 answer:
yanalaym [24]3 years ago
4 0

Answer:

Break-even is at a price of $100

Explanation:

Break even is when the incomes are equal to the outcomes.

In this case,  the sales are our incomes and the variable and fixed cost are the outcomes.  

So,

Sales =variable cost-fixed cost

Sales=price *x

Variable cost= $50x

Fixed cost=$50,000

units= 1000

price *1000=$50*1000+50000

Price =(50000+50000)/1000

Price =100000/1000

Price =$100

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Particulars                                      2021                2022                    2023

Beginning Inventory                        <u>277</u>                <u>253</u>                         235

Cost of Goods sold                          633                623                        <u> </u><u>586</u>

Ending inventory                             <u> </u><u>253 </u>              235                          220

Cost of good available for sale       886                <u>876</u><u> </u>                         806

Purchases                                         640                <u>623 </u>                         595

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Purchase returns                               26                   32                            16

Freight-in                                            15                    34                            18

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Cost of Goods Sold =  Cost of good available for Sales - Ending inventory

Ending inventory = Cost of Goods available for Sales - Cost of Goods Sold.

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