Question

Mason Company manufactures and sells shoelaces for $3.90 per pair. Its variable cost per unit is $3.50. Mason's total fixed costs are $12,400. How many pairs must Mason sell to break even?

Answer 1

Answer:

31,000

Explanation:

Given that,

Selling price = $3.90 per pair of shoes

Variable cost = $3.50 per unit

Total fixed cost = $12,400

Contribution margin per unit:

= Selling price - Variable cost

= $3.90 - $3.50

= $0.40

Pairs must Mason sell to break even:

= Fixed cost ÷ Contribution margin per unit

= $12,400 ÷ $0.40

= 31,000