Question

XYZ Company sells Bluetooth headphones through Amazon.com. Each pair of headphones retails for $50. Amazon’s markup on this kind of product is 25%. The headphones cost XYZ $13 to manufacture. If its fixed costs are $608,985 annually, what is XYZ’s break even quantity?

Answer 1

Answer:

XYZ’s break even quantity is 16,459 units

Explanation:

Break-even quantity sales is the sales quantity where the sales revenue is the same total expenses leaving a zero net income.

Break-even sales quantity=fixed  costs/contribution per unit

fixed cost is $608,985

contribution margin=sales price-variable cost per unt

sales price per unit is $50

variable cost is $13

contribution margin=$50-$13=$37

breakeven sales units=$608,985/$37=16,459 units