Question

Juniper Enterprises sells handmade clocks. Its variable cost per clock is $16.80, and each clock sells for $28. Calculate Juniper’s contribution margin per unit and contribution margin ratio. If the company’s fixed costs total $8,400, determine how many clocks Juniper must sell to break even.

Answer 1

Answer:

For Juniper Enterprises to breakeven it must sell 607 units

Explanation:

To break-even means making sales where the proceeds from sales transactions equal the amount of total costs incurred,hence no gain no loss situation.

Break-even point in units=fixed cost/contribution per unit

fixed costs incurred is $8,400

contribution per unit=selling price per unit -variable cost per unit

selling price is $28

variable cost is $16.80

contribution per unit=$28-$16.80=$11.2 0

break-even in units =$6,800/$11.2 0=607 units